The effects of trade tariffs imposed on US imports by China have had a fairly muted affect on the USD so far, although a number of US companies have seen share prices fall. This US Dollar forecast looks at the factors currently affecting rates of exchange, and how this could change in the short term. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past month.

Currency Pair% ChangeDifference on £200,000
GBPUSD0.63%$1780 USD

Chinese Trade Retaliation

The government in China have responded to President Donald Trump’s tariffs on steel and aluminium by introducing taxes on many American consumer goods. The Chinese have struck back in a way that could have an effect on Chinese Consumers however it will affect a major amount of American companies. By taxing the likes of Alcohol, Cigarettes and American cars the scope of the effect could be much greater than Donald Trump had planned when he looked for a tax on materials. Furthermore, Trumps administration identified another 1,333 products they would potentially add tariffs to and unsurprisingly within 2 hours the Chines Government responded with 1,333 items of their own.

Cable rates to hold above 1.30 before year end?

Market effects so far

Yesterday several companies who have major dealings with China saw share process fall. However the US Dollar doesn’t seem to have suffered too much from the uncertainty surrounding the trade tariffs. There may however be concerns moving forward for the US economic performance along with global growth as forecasts didn’t account for barriers being introduced in trade.  There was at the turn of the year expected to be 4% growth around the world with US forecasts over 2%. In my opinion with the changes taking place it seems difficult for those predictions not to be changed. The US Dollar could start to struggle in the short to medium term, especially if the US Federal Reserve were to announce a hesitation for two further interest rate hikes this year.

Non-Farm Payrolls Tomorrow

The biggest release of the month will come tomorrow when the amount of new jobs created in the United States outside of the agricultural industry is announced. There will also be the release of the changes to the average hourly earnings. Both these releases can have a major effect on the currency markets especially if there is any variation from the expected. Last month for February there was 313,000 new jobs created however for March the level is expected to be 198,000. If you do have any US Dollar requirements coming up make sure you’re in contact with your broker to capitalise on any rate movements. 

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.