With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The table below shows the difference in US Dollars you would have achieved when buying £200,000 over the past 7 days.
This month’s volatility on Dollar exchange rates highlights the market’s distrust of US president Trump. It’s worth noting that before the investigations into his connections with Russia began to intensify, the dollar was flying in decade highs against it’s major currency counterparts. But ever since Trump called for the FBI head Comey to drop investigations, the dollar has been stuck in a downward trend, having retreated by almost 4% since mid-February. To put it into monetary terms, a $200,000 is now £6,000 cheaper.
As a result, I expect the markets to be closely watching the way Trump handles his face off with special counsel Robert Mueller.
Senate democratic leader Chuck Schumer has already ruled out the possibility of Trump firing Mueller making it clear the President would struggle to gain any kind of support from his party should he obstruct investigations further. He went on to shoot down the possibility of Trump potentially pardoning himself stating it would go against his party’s deontology.
The uncertainty surrounding Trump doesn’t stop at his pending probe. Investors are still unconvinced in the President’s ability to for fill his promises on tax cuts to drive economic growth in the States. Economic data has been inconsistent of late which has left the Federal Reserve to second guess raising interest rates once more this year. One thing holding them back is a gradual decline in consumer spending.
In the early half of this week there is a raft of economic data from the US manufacturing sector and housing market to be released, which are used as a key barometer by the Fed to track spending levels. These figures have the potential to sway rates in the build up to the Fed interest rate meeting on Wednesday evening. If they come in worse than expected I wouldn’t be surprised to see GBP/USD to drive back up towards the 1.30 mark.
Crucial GDP figures will be released on Friday and an increase up to 2.7% from 1.4% is expected which should provide some support for the dollar making it more expensive to buy.
Thank you for reading today’s US Dollar report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. I am more than happy to assist you with any of your currency requirements. Feel free to e-mail me here.
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