Investors will look to next week’s non-farm payroll figures to determine the likelihood of another near term interest rate hike.

US Dollar gains on hawkish Fed comments

The US Dollar has received additional support this week after two US Federal Reserve members made statements on future monetary policy. In a bold move, Boston Fed President Eric Rosengren has called for four additional rate hikes this year – Put another way that would be one hike every other month. He has expressed concerns about an overheating economy which could result in asset bubbles and he feels a gradual but swift increase in rates would be the best way to tackle this.

His comments are important considering he has been in the past extremely dovish after the financial crisis. Similarly, San Francisco Fed President John Williams stated that the US economy had largely attained a full recovery after nine years and stated that raising rates gradually now will prevent the economy from overheating. He said he "would not rule out more than three increases total for this year".

US Dollar Supported on Better GDP

US Gross Domestic Product (GDP) figures increased by more than expected after the official numbers were revised up yesterday covering the fourth quarter of 2016.

Meanwhile US jobless claims released yesterday showed some improvement with 258k initial jobless claims last week, although the figure was still higher than expected.

There are handful of US releases this afternoon which could still help drive the US Dollar to include personal income and spending numbers and the Baker Hughes US Oil Rig Count. The rig count measures the number of active oil rigs which can be used a good barometer of the drilling and oil sector.

Next Fridays US Non-Farm Pay Roll numbers could give us some more clues as to how keen the Fed will be to stick to its current rate hike projections. The markets have largely priced in these three rate hikes although any suggestion the US recovery is in question could see the US Dollar weaken.

The US Dollar could further strengthen against the Pound, and those with a US Dollar buying requirement may look to capitalise on the recent spike in GBP/USD exchange rates. Call us on 01494 725 353 or email me here to get a free quote.


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