The US dollar strengthened overnight following from reports that the US and China have made the best progress seen in 7 months towards putting an end to their trade war. This has provided clients with US dollars to sell with an excellent opportunity to do so this morning.
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Minutes from the latest Federal Reserve Interest Rate decision meeting on 30th January were released yesterday evening. FED Officials confirmed the recent decision to ease off its aggressive interest rate hiking pattern, with many officials unsure of the need to raise rates again in 2019, and cited muted Inflation and the recent slowdown in global growth as two of the reasons behind their cautious stance. The FED also confirmed that it will keep a close eye on any slowing of the economy following from the recent partial US Government shutdown and the severe weather conditions in the Mid-West US.
Another factor behind its dovish tone was due to the ongoing trade war between the US and China, and the possible impact this would have to the US economy. Although discussions between the 2 largest economies in the world are appearing to progress well, with Donald Trump saying earlier this week that the 1st March ‘is not a magical date’, giving investors a little confidence that they could extend this date in order to reach an agreement on imposing tariffs on $200 billion of Chinese goods rising from 10% to 25%, this still remains a concern to the FED and investors alike.
The FED changed its stance to monetary policy towards the end of last year after the US witnessed its worst December for US Stocks since the Great Depression in 1929, combined with the escalating trade war concerns, and pressure mounting from Donald Trump to stop raising rates for fear of damaging the economy.
There will be plenty of opportunity for volatility for US Dollar exchange rates this afternoon as a flurry of US economic data will be released.
Key data to watch out for includes Continuing and Initial Jobless Claims, providing an insight into the number of new unemployment benefits claims, along with Durable Goods Orders at 1.30pm. Services and Manufacturing Purchasing Managers Index will follow and are expected to show a slight improvement from the previous month's reading. If you have an upcoming US dollar transfer to make then get in touch with us ahead of these announcements to avoid any potential losses.
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