With the quickly changing currency markets, it is important to be aware of the what is driving the currencies in or out of your favour. The table below shows the difference between buying £200,000 at the high and low levels over the last month.
|Currency Pair||% Change||Difference on £200,000|
Donald Trump is now a few days into his Middle East tour, leaving behind a large swathe of the American population up in arms with his most recent scandal.
The Dollar has been losing value as, for the first time, we are finally seeing a controversy involving Trump stick. This is not something that is being shaken after a few days, and a special counsel has now been appointed at the FBI over this investigation. Due to the potentially negative impact this could have on the Trump administration’s ability to put meaningful legislation through, and the negative impact any escalation in the situation could have on a likely US interest rate hike is making investors wary of holding USD. Faltering demand equals a slide in value.
However, Trump is now doing everything he can to get some good news into the news cycle. His Middle East tour was touted as one of reconciliation and peace, but so far all we have heard is a demand for greater domestic intervention against religious extremism, and emphasising the threat of Iranian nuclear capabilities while in Israel.
Events at home are also drawing attention back to the Russia investigation. Michael Flynn, the disgraced ex-National Security Advisor just yesterday stated that he would not be cooperating with the Senate Committee after previously being refused immunity. He will be invoking his Fifth Amendment rights and saying nothing.
With little help so far this week from the current political climate selling the Dollar, USD sellers will have to hope for events on the economic side to bolster their selling position. Arguably, however, they will be found wanting.
Today new home sales for the month of April will be released and these are set to show a contraction, reflecting a slowing market. Exaggerating this further drops on the Dollar could be found on Wednesday, with existing home sales expected to produce a similar contraction in performance.
So this can’t be explained away with low construction activity, if already built homes are struggling to be shifted, then a very real impact could be seen on the Dollar. Largely due to the historical links between the US housing market and continued economic performance, in these situations you can expect to see the more nervous investors running for the hills. If so, GBP/USD could well have a more sustained push above 1.30.
Thank you for reading today’s market report, I would greatly appreciate any feedback you have and would be glad to reply personally. Feel free to e-mail me here.
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