It appears the USD has ended its recent trend of weakness with Chinese trade data coming out stronger than anticipated. This could well impact the FED's decision to raise hikes in the near future. This afternoon sees the release of some key US economic data which could compliment the rate hike decision further. These factors have impacted GBPUSD rates by as much as 0.5% during yesterday's trading day.
The US dollar has slowed its recent decline with resistance now being seen at 1.45 for GBP USD. Trade data from China at the start for the week came in considerably stronger than expected which has lent support to the dollar as China is now running a much larger trade surplus. Considering China has had a bad run of financial turbulence on a very large scale since the beginning the year this has impacted on the Fed’s decision making as to when it should raise interest rates. Considering the expectation was for four US rate hikes, this had to be quickly adjusted following plunging Chinese stock markets which has resulted in dollar weakness from its recent highs.
Whilst the growth outlook for the US has come into question with fewer American jobs being created last week, any positive data from China is welcome. The US will now be looking very closely to Chinese economic data in the coming weeks as it will impact on the Fed’s decision as to when it next raise interest rates. If China is at a turning point, then the dollar may now start to push higher again.
This afternoon sees US initial jobless claims, import and export prices and a handful of minor releases which should keep the markets occupied. Retail Sales tomorrow to end the week should be much more interesting - A strong number here could see the dollar continue to rally.
Positive global economic releases could impact the FEDs decision to hike rates this year and it helps to understand how these factors could impact probabilities. In the event the FED hike rates, US Dollar is likely to strengthen. Get in touch with one of our brokers today to find out how this could impact you, call 01494 725 353 or email me here.
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