Brexit has been a big distraction from the problems faced in the US, the last non-farm payroll figures were hugely disappointing and Janet Yellen expressed her concerns to congress regarding slower growth over the coming months. How will the latest Non-Farm payroll figures stack up this Friday?

USD after Independence Day

After a quiet day on the markets for US Independence day it is clear the US dollar maintains its safe haven status in this time of global uncertainty with a flight to the safety to the dollar. The dollar remains strong despite a growing consensus that the earliest interest rate hike in the US may now not come until next year or possibly even 2017. This is a substantial change considering as many as four US rate hikes had been planned for this year which now looks set to be none. It’s not all to do with Brexit though, the mood in the US was weakening well before although this factor is now another serious consideration for the US Federal Reserve going forward.

US Non-farm payrolls are released on Friday which should give new direction for the dollar. Last month’s numbers were so poor that it was the main factor which lead to the US Fed not raising interest rates. The US only created 38,000 jobs in May which was the lowest level seen in five years. Fridays release is important as we will learn whether last month’s drop was just a blip or something more entrenched.

Where does the dollar go from here?

Any improvement in the US economy will ultimately lead to dollar strength as those interest rate hike expectations are brought forward. At the same time any deterioration in both the UK and Eurozone in particular will also see a continued flight to safety. In the short term with current uncertainty the dollar is in a very strong position.

US factory orders are released this afternoon whilst mortgage applications and trade balance data could create some added volatility ahead of non-farm pay rolls on Friday. Anyone selling US dollars would be wise to consider taking advantage of the excellent trading prices as the exchange rates can change at a moment’s notice especially in these markets.

Fridays Non-Farm payroll figures could see further strength for the US Dollar, speak to our brokers ahead of the release on 01494 725 353 or email me here for assistance.


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