The US Dollar has been on the decline since Trump's conflict with North Korea but with further interest rate hikes on the table and strong unemployment figures, will the US Dollar remain lower for long?

US Dollar at lowest levels against the Pound since 2016

With Theresa May calling the shock ‘snap election’ earlier this week for June, the Pound has enjoyed a strong few days against the Dollar, gaining by as much as 2.5% in value since Tuesday. To put this in to monetary terms, a £200,000 transfer in to Dollars could have resulted in an extra $7,000 if timed effectively. We are now in fact trading at some of the best levels in 2017 and a great opportunity for US Dollar buyers.

One of the main reasons for the fall in the value of the U Dollar could be attributed to the growing tensions between North Korea, with Trump’s war of words with Kim Jong Un stirring up a bit of panic amongst investors.

The IMF are also in the US at present, and they have heaped further pressure on the Dollar, claiming that Trump’s protectionist policies in his bid to shrink US trade deficits and restrict their imports could have a detrimental effect on the global economy. It will be interesting to see how Trump’s administration react to these warnings from the IMF, but these fears and uncertainties have the potential to weaken the US Dollar further still.

The US dollar could see considerable volatility this weekend

Global uncertainty is damaging the US Dollar

Another big driver on the value of the Dollar is the timing of their next interest rate hike. The Fed’s plan at the beginning of the year was to raise rates a further 3 times this year, but with these global uncertainties mounting, the Fed may be put off from acting too soon and damaging the US economy. This again could dampen the Dollar’s strength and provide spikes for USD buyers to take advantage of, as the longer we go without a rate hike, the more likely the Dollar is to weaken. On the other hand, data from the US labour market yesterday highlighted the lowest unemployment levels in 17 years, with the best stretch of jobless claims since 1970. This would suggest that some of Trump’s policies to boost the labour market are having the desired effect and providing a boost to the economy.

There is a raft of data today from the US economy including manufacturing and services data, coupled with home sales figures for March. If these figures can follow suit from yesterday’s data then we could see a mini revival from the Dollar for the end of this week.

Those looking to buy the US Dollar may be prudent to take advantage of the yearly highs whilst the US Dollar is hurting from global conflicts. Call us on 01494 725 353 to speak to one of our experts and detail your requirements with them.


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