US Dollar rates after US Fed Minutes Overnight

The US Dollar could see further strength following comments from Federal Reserve Bank of Atlanta President Dennis Lockhart who suggested that he feels one more US Fed rate increase may be justified later this year. My view remains that the earliest the Fed will hike would be December after the US presidential election. September in my view is too soon as the economic outlook still remains uncertain whilst the November meeting is just one week before the US presidential election.

US mortgage applications took a dive yesterday and whilst not a leading indicator of the health of the economy it does still signal that there are still concerns for the US economy. US interest rates are still historically very low so a higher number or mortgage applications should be sought after which would signal a more solid recovery.

The official minutes from the July meeting released overnight signalled that there is some motivation to still hike before the end of the year but the Fed would like to keep options open - If in doubt wait and see.

Selling Dollars for GBP at 31 year High

An improvement in economic data over the next few months should see the dollar strengthen on the expectation the Fed will look to hike at the turn of the year. However the political dimension is likely to have the opposite impact with dollar weakness in the run up to the election. Client selling dollars may wish to take advantage of the current levels which still remain close to a 31 year high for USD GBP and hence it remains an excellent opportunity to sell.

This afternoon should be interesting with initial jobless claims and the Philadelphia Fed Manufacturing Survey for August which highlights manufacturing conditions within the US. Next week sees a raft of data over the week for the manufacturing sector which should give some more clues as to the performance of the sector and how the US Fed are likely to react.

US Dollar remains at a 31-year high against Sterling, those looking to make the most of this opportunity can call us on 01494 725 353.


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