US Jobless claim applications took a sudden spike last week with concerns that the record high labour market may be losing steam. Whilst it’s only the first indication with talks of an interest rate cut coming from the Federal Reserve we may not be too far away from seeing the US economic performance begin to cool off.

Currency Pair% Change (Month)Difference on £200,000
GBPUSD2.84%$7,140

Last week we saw the economy create 75,000 new jobs in the month of May which was considerably below the forecasted level and now coupled with an increase in jobless claims a pattern may be emerging.

Retail Sales and Consumer Sentiment

Retail Sales and Consumer Sentiment

This afternoon there will be two significant releases for the US with the Retail Sales for May, which is expected to show an increase to 0.4%. A few hours later the Michigan Consumer sentiment Index for June will be released which provides an insight into consumer habits.

The US Federal Reserve on Wednesday next week will take centre stage as they provide their latest interest rate decision. There is an expectation that there will be a cut this year but it’s not clear if it will come as soon as June. Potentially more significant than the actual rate decision is the statement that follows along with Chairman Jerome Powell’s comments.

If Powell was to talk of a softening economy with some concerns around the corner the US dollar could lose some of the gains made over the first half of 2019. The US economy is a very tricky market to gauge at the moment with so many factors dictating how the economy moves.

The tariffs from trump will continue to be a factor but one thing to consider is the rising tensions in the middle east. There have been a few attacks of late with relationships starting to strain, this may trigger investors to move funds into safer holdings. The US dollar is considered a safe haven and there could be a steady strengthening of the currency if tensions continue to rise. Make sure you’re speaking to your broker if you have an exchange to complete.             

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