The greenback gained in value yesterday as investors showed signs of concerns of a slowing global economy. It wasn’t just the US dollar that benefitted but the Japanese Yen along with the Swiss Franc, which demonstrates investor concerns and a rush to safe haven currencies.

Currency Pair% Change in 1 monthDifference on £200,000
GBPUSD-1.91%$4893.83
Safe Haven status helps push the US Dollar higher

Coincidently the comments that sparked the concerns came from the US Federal Reserve Bank earlier in the week when dovish comments from the FED suggested the world economy may be cooling off, and the FED is considering altering the pace of its current bullish monetary policy plan. Members of the bank such as Robert Kaplan and Richard Clarida have expressed their concerns regarding the slowdowns in Europe, China and the global economy as a whole.

Markets are generally pricing in fewer rate hikes from the Fed next year than previous thought, although the 4th and final rate hike in 2018 is still likely according to analysts. As it stands the markets are expecting to see a further two hikes next year. Although it's outside of his remit, the President of the US Donald Trump has voiced his disapproval of the aggressive monetary policy plan from the Fed.

 

Personally, I think that although the USD index gained today based on the concerns of a slowdown, if it’s confirmed that there are less hikes expected next year I think we can expect to see the greenback lose value.

Busy afternoon of data out of the US today

Tomorrow is likely to be a much quieter day as its Thanksgiving in the US and therefore US markets will be closed.

This afternoon on the other hand could be different as Durable Goods Orders, Existing Home Sales and the Consumer Sentiment Index will all be released at either 13.30 or 15.00 later today. If you wish to be updated in the event of a major market movement for the USD during this time, do feel free to register your interest with us.

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