Trump is expected to announce further trade tariffs on Chinese imports in addition to the existing aluminium and steel tariffs already set up. The risk of a 'trade war' could have an impact globally. The US Dollar report below looks into this and how USD could be affected in the long run. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points yesterday.
|Currency Pair||% Change||Difference on £200,000|
The US Federal Reserve meet tomorrow and will announce the latest interest rate decision. The Fed are widely expected to raise interest rates to 1.75% under the watch of the new Fed Chair Jerome Powell at his first meeting. Recent rate increases have been made gradually so three months on since the last December hike would suggest this could be a good time to raise rates again. The hike itself should largely be priced into the market although the detail on future rate hikes will be interesting for the markets and could give new direction for the dollar. The last projections from Fed members pointed towards three rate hikes throughout 2018 although more recently there has been a suggestion that two or possibly four may be required. Any official change here could see the dollar rally if the Fed does in fact become more hawkish. The planned tax cuts under President Trump and the strength of the US economy could see the outlook for inflation rise more rapidly and the Fed will be keen to not leave it too late in terms of rate rises.
US data is light today with sales numbers released this afternoon. The strength of the housing market should be revealed tomorrow with the release of existing home sales and mortgage applications ahead of the Fed meeting.
The risk of a trade war stemming from heightened trade tensions still remains a likely outcome and is something which could have an impact on global economic growth.
President Donald Trump is expected to use additional tariffs to the tune of $60 billion on Chinese imports which may be announced later this week. This is on top of the steel and aluminium tariffs which will come into force this week.
The new tariffs to be announced are expected to cover items such as power tools and electrical appliances. Expect a big market reaction for the dollar and more volatility in the financial markets on any developments here.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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