The US Dollar ended last week in another strong position against the Pound and Euro, and continues to be the main performer in global trade wars, despite being right at the heart of the issue. More on the safe haven currency and the impact of Trump's actions on the global economy below, along with the range of exchange rates for GBPUSD for the past month. This shows the potential difference in USD return when selling £200,000.00 during the high and low points.
|Currency Pair||% Change||Difference on £200,000|
Chinese President Xi Jinping spoke on Sunday and reinforced his commitment to building an open world economy, however made no direct mention of Trump or the US, but instead referred to ‘unilateralism and protectionism rearing its head’. No major breakthrough has been made between the US and China despite further talks last month, and further tariffs of $16 billion worth of Chinese and US goods were implemented. It has been estimated that every $100 billion of tariffed goods could reduce trade globally by 0.5%, and could have dire repercussions to the entire global economy. However, the US economy continues relatively unscathed as the world’s largest economy, but the question is, for how long? Donald Trump continues to unnerve the markets with his unpredictability – the North American Free Trade Agreement is currently looking like Canada could be omitted from the agreement and it was only last week that the President had threatened to pull out of the World Trade Organisation if it didn’t treat the US more fairly.
The US Congress will be returning to office after their Summer Recess tomorrow, and could be the start of volatility for the US Dollar. Congress will need to vote on another budget before the month end, and if an agreement isn’t reached it could push the US Government into shutdown once again. Any final decision on the renegotiation of the NAFTA agreement will also be passed through Congress first.
The US are enjoying a national holiday today, Labour Day, so markets may remain subdued, however looking to the rest of the week Manufacturing PMI will be released tomorrow and is expected to show a fall in August compared to July. Initial and Continuing jobless claims, Manufacturing and Non-Manufacturing PMI, and Factory Orders all released on Thursday which could allow for a busy day for the Dollar.
The first Friday of every month brings the release of Non-Farm Payrolls which can be a significant market mover, and the number of new jobs created outside of the agricultural sector is expected to improve from 157k to 187k, and the unemployment rate is also expected to fall to an 18 year low. If this is the case, I would expect the US Dollar to strengthen further at the end of the week, however this of course is reliant that any positive news regarding its currency counterparts isn’t noted. Being in contact with your Account Manager here ahead of these releases can allow us to alert you of any spikes as they happen.
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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