The latest developments in the US Chinese trade saga yesterday proved to be Dollar negative. Analysts have become largely concerned that the ongoing trade concerns will have a negative effect on the US economy in the up and coming months. This was reflected in the sell-off of 3 month treasury bonds yesterday, which was in response to China announcing it would drop import tariffs completely for a number of countries, but not the US. More on the implications of Trump's trade wars on the Dollar in the market report below, with the table showing the range for cable rates during the past week and the difference in USD return when selling £200,000.00.
|Currency Pair||% Change||Difference on £200,000|
Yesterday, EUR/USD and GBP/USD both reached multi month highs. I believe that both currencies have scope to rise further in the up and coming days or weeks, purely because investors are likely to secure their positions and sell off the Dollar ahead of the Federal Reserve Interest Rate decision next week.
With so much happening in the global markets at present, I think it may be worth looking at what could influence USD value.
Yesterday the US initial Jobless claim data fell to a 49 year low. With record job opportunities, strong hiring from employers and rising incomes in the US, analysts are largely expecting the prediction for another 2 hikes to be accurate. As mentioned, this could be starting next week and could see the recent GBP and EUR gains against the USD reversed.
Starting Monday, the US will impose $200bn worth of tariffs on Chinese goods entering the US.
This was followed with China retaliating by announcing $60bn worth of tariffs on US goods entering China. The main concern is that analysts feel that China have the capability of imposing further tariffs, as the retaliation wasn’t as bad as initially thought. If this is the case, I’d expect the USD to gain if these rumours materialise due to its safe haven status.
Domestically for the US, today the preliminary insight into the Purchasers Managers Index data will be released. Analysts expect the data to improve ever so slightly, however the recent storms in the US may have implications. Keep an eye out on these releases for an insight into the official figures released later next week.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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