Last week's US retail figures provided strength for the Dollar and therefore could increase chances of an Interest rate hike. This week a number of key economic releases are due which could strengthen the Dollar further. In just a week, GBPUSD have moved 1.26%, a difference on £200,000 would have been $3620.
The end of last week saw better than expected Retail Sales for April which caused the USD to gain nearly a cent against Sterling on Friday afternoon. Signs of strength in the US economy will increase the chances of the Federal Reserve to consider an interest rate. However the opportunity for the Fed to implement a rate hike is slowly drifting away, especially as we move towards the volatility of a US election. Unless there is a rate hike in the next few months I believe it seems unlikely that there will be a rate hike pre November.
Donald Trump has begun the process of back tracking on some of the more outlandish remarks in his Election Primaries campaign. Trumps suggestion to ban Muslims from entering the US has been toned down by the real estate magnate who has now said that was only an idea and not fact. Furthermore having previously argued that taxes for the richest should not be increased he has said that whilst he wants to keep that on the cards he may not be able to.
Whilst this back tracking doesn’t come as a surprise, for a lot of politicians it can cause problems of integrity. However for Trump because he is moving from such extreme positions it is turning him into a more credible Presidential candidate and there seems to be more support coming out for him.
The US this week will release their Consumer Price Index figures and after good retail figures on Friday there could be further strengthening for the Greenback. Tuesday will also bring the retail production figures which are expected to show an improvement for April compared to March. On Wednesday the Federal Open Market Committee minutes from the latest meeting will be released, this should give an indication into the thoughts of the group who decide the US interest rate. Whilst Thursday will reveal the initial jobless claims, which indicates the change in the number of US citizens on state report.
The large amount of data being released this week could cause significant movements so make sure you’re in contact with your broker.
As mentioned above, this week will be the release of some key US data which could strengthen the Dollar and therefore make purchasing USD with Sterling more expensive. Get in touch with your broker today to discuss further. Call our trading floor on 01494 725 353 or you can email me for more information.
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