The Dollar took a hit this week as the Federal Open Market Committee (FOMC) adopted a more dovish tone than many were expecting in the monetary policy statement that took place on Wednesday evening. Whilst the markets weren’t expecting any change in interest rates, they weren’t prepared for the neutral stance that they adopted afterwards, as they try to move away from further gradual rate hikes amid concerns of a global and domestic slowdown.
More bad news for the Dollar yesterday, as the number of Americans filing for unemployment benefits jumped to the highest levels in nearly a year a half, and ties into the concerns the Fed (US Federal Reserve Bank) raised on Wednesday regarding a slowing labour market. This has helped to keep the Dollar under pressure during this week’s trading, and doesn’t bode well for future concerns over the US Government shutdown, which has been largely blamed for the huge jump in filing for benefits as Government workers haven’t been able to work. This figure could be set to get worse if the Government shutdown isn’t resolved and could spell long term economic worries.
Non-farm payroll data is out today, and could condemn the Dollar further if figures don’t hit expectations. The number of new jobs created outside the agricultural sector in January is expected to be around 166,000, a lot less that the 312,000 created in December which was above market expectations. If this figure comes out worse than anticipated, I think we could see cable (GBPUSD) trading in the ranges of 1.31 – 1.32.
Next week I would largely expect news regarding the US economy’s slowdown to weigh on the Dollar’s value. The US is set for the coldest winter conditions in some years, so I would expect this to feed into the headlines and could affect longer term US economy health. Next week I would expect the US Purchasers Manager’s Index (PMI) data to take centre stage in the form of economic data.
If you’re looking to transfer US Dollars in the near future please don’t hesitate to get in touch to discuss your options with your broker.
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