The FED kept rates on hold at 1% last night but suggested that a hike could be on the table in June. Could this spell an end to the US Dollar's recent trend of weakness? The below table shows exchange rate movements for GBP/USD over the course of the last month.
|Currency Pair||% Change||Difference on £200,000|
US data released yesterday showed a strengthening US economy despite the poorer than expected manufacturing data released earlier in the week. Markit PMI data for the Services sector showed growth in April compared to March, and ISM also announced that manufacturing activity grew to 57.5 in the same period, again much better than analysts had predicted. However, Employment change data showed that private employers created more jobs last month than expected, although this was still far lower than the figure already revised down in March and was the lowest reading in 6 months.
The Federal Reserve announced yesterday evening that they would be keeping Interest Rates on hold at 1% as had been widely expected, and provided signs that they could be preparing for a rise in the next meeting in June. The FED spoke positively of the US labour market and said that consumer spending remained strong, and confirmed that inflation has been getting increasingly close target. This positive overview prompted the Dollar to strengthen against all of its major currency pairings, including gains of 0.5% against the Pound and 0.4% against the Euro.
Looking ahead to the rest of the week, Jobless Claims data will be released at 1.30pm this afternoon measuring the number of people filing for unemployment and claiming non-working benefits. Then on Friday we will see a host of US data including Non-Farm Payrolls, Unemployment rate and another speech from FED Chairlady Janet Yellen. If any of these releases disappoint we could see the Dollar lose some of the gains it has made since yesterday, therefore if you wish to take advantage of these current levels this morning please don’t hesitate to get in touch with one of our experienced Brokers here.
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