The US Dollar also saw an excellent day yesterday following much better retail sales data for May which boosted confidence in the US economy. US retail sales jumped to 0.8% against expectation of just 0.4% helping lift the dollar. US initial jobless claims also arrived better than forecast with 218k Americans filing for state unemployment insurance also lending support to an already buoyant dollar. The table below shows the range of exchange rates during trading hours yesterday, which is reflected in the potential Dollar return throughout the day.

Currency Pair% ChangeDifference on £200,000
GBP/USD105%$2,900
This strong data paints a much better picture on the high street and the US Federal Reserve will be pleased to see a good set of data so soon after the hike on Wednesday.

This afternoon sees US industrial production figures and the Michigan Consumer Sentiment Index. This survey specifically focusses on consumer confidence and whether consumers are prepared to spend money. Although no change is expected a higher reading could prove positive for the dollar and drive the rally higher.

US Dollar strength cause for concern

Dollar Supported on Fed Rate Hike

USD exchange rates are likely to keep the upper hand after the US Fed voted unanimously to raise interest rates to 2% this week. The outlook for the Dollar is upbeat considering the Fed have signalled in their forward guidance that rates are to rise twice more this year which would take the total to four hikes for 2018. This is one more hike than what was initially anticipated at the start of the year and suggests the Fed are optimistic for the US economy.

Clients with immediate requirements should be aware that the Dollar could soon come under renewed pressure after the Wall Street Journal reported that the US government is considering introducing additional trade tariffs on Chinese imports worth up to $50 billion.

This action is expected possibly as soon as today and would likely see a retaliation from China matching those tariffs which could create additional volatility for the dollar. A trade war is not desirable and the dollar is likely to move on the back of any developments here.

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.