The FED's Chairlady has implied that future rate hikes will be scaled back. The US Dollar has so far remained non-reactive to the news as the Dollar continues to benefit from its safe haven status in the wake of global political tensions.
Head of the Federal Reserve Bank Janet Yellen raised suggestions that there could be no further interest rate hikes this year, however the markets didn’t seem to bite. Janet Yellen stated that the central bank no longer needs to supply any “oomph” to the US economy. Yellen highlighted the fact that the Fed has only raised rates 3 times in the last decade and from her comments it seems unlikely the Fed will be doing much more this year. One of the reasons the market may not have reacted heavily is that other Fed officials have indicated there will be at least 2 more hikes this year.
Considering there is a 12 member vote on interest rate hikes from the Federal Open Market Committee, Yellen’s familiar dovish comments may not be enough to stop future hikes and therefore US Dollar strength. Any long term US Dollar sellers may want to bare this in mind if they have a transaction to complete further down the line.
President Trump and President Jinping looked to have had constructive talks over the last week with hope for a trade deal in the next few months. From what was feared to potentially become a race to the bottom and a major grudge match, there is now considerable optimism. China are considering offering some quick opportunities to the US by lifting bans on purchasing beef from America, there will also be more scope for Chinese companies to purchase US goods.
Pound to US Dollar exchange rates jumped up to just below the 1.25 level reaching a 5-day high. There were fears for Sterling with inflation data being released however there was no further upwards movements as expected by economists. Considering cable moved a cent across the day which meant you would gain $2000 at the high compared to the low on a £200,000 transfer, being in contact with your broker is important. There is so much movement in the market letting your trader now your requirement could help you trade at the best levels.
US Dollar buyers can take comfort in the weekly highs and it may be wise to act sooner rather than later before Brexit negotiations take form. Speak with a member of our team on 01494 725 353 to learn more.
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