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 below table shows the difference in US Dollars you would have achieved when buying £200,000.00 during the past week.

Currency Pair% ChangeDifference on £200,000
GBPUSD2.85%$7940
Trade war still benefitting the USD

Dramatic week for the Dollar

The US Dollar had a major slide against the majority of its counterparts last week, falling by 1.7% overall. On Thursday evening last week, President Trump echoed his plans for a strong Dollar, before delivering his ‘America first but not alone’ speech to Davos on Friday that helped to steady the Dollar’s decline.

This week is another important week with plenty of economic releases as well as Janet Yellen’s last meeting as Federal Reserve Chairlady. This is unlikely to bring any volatility as the chances of an interest rate hike are very low at this month’s meeting. The markets aren’t betting on an interest rate hike until March 21st and this has been a key driver for the US Dollar’s strength of recent times.

I would predict the US Dollar to remain largely under pressure until there is further clarity on interest rate hikes.

Whilst the Dollar remains under pressure, I would personally be looking at this week’s influential economic data to move on any spikes. Today the latest consumer spending is released, on Thursday the Latest Institute of Supply Management report is released followed by the all-important labor report Friday. Whilst the unemployment is expected to hold firm at 4.1%, the non-farm payroll report is expected to increase by 180k for last month. This could highlight the strength in the US economy of present and could support the case for an interest rate hike at March’s meeting which is all Dollar positive.

President Donald Trump’s Speech

Today’s speech is likely to bring with it some volatility. The speech is titled, ‘building a safe, strong and proud America’ and almost every aspect from the economy to infrastructure is likely to be spoken about, so I would expect the Dollar to largely strengthen in this ‘pro-America’ speech. Last week’s Davos speech is a key indicator of how the markets react when Trump talks, and this is set to be no exception. I would expect the stock markets to rally which could bring with it Dollar strength.

For more information on how future data releases could affect your USD requirement, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.