Yesterday, negative US Producer Prices data caused the Dollar to fall slightly. This afternoon we will see the latest Consumer Price Index data for the US which could cause another fall if the figures are disappointing. The table below shows the difference in Dollars you could have achieved when buying £200,000.00 during the high and low points of the past week.

Currency Pair% ChangeDifference on £200,000
GBPUSD6.53%$17620
Will the USD benefit from heightened uncertainty?

Will the dollar benefit from heightened uncertainty?

The breaking news yesterday was that President Trump withdrew the US from the 2015 Iran nuclear agreement. This agreement was officially titled the Joint Comprehensive Plan of Action or JCPOA and was intended to limit Iran’s nuclear programme, effectively limiting its capability of developing nuclear weapons. In return, all nuclear-related sanctions were lifted on Iran, in an effort to kick-start its failing economy. The reaction is the important thing from all this. The Iranian President Hassan Rhouhani has said that Iran will take a few weeks to respond formally to the US’s decision to leave the agreement. US crude oil rose and the US strengthened slightly, although at present, the markets have remained calm.

The disturbing video of Iranian politicians burning an American flag and a copy of the agreement has drawn the most attention. Experts believe that if Iran was to start enriching uranium again, it could build a bomb within a year.

Any scare-mongering of this nature is likely to see the Dollar benefit as a safe haven currency. If these rumours were to circulate, I wouldn’t be surprised to see the Dollar strengthen.

Economic Data in focus US Producer Price Index and Consumer Price Index

The US economy took a slight hit yesterday causing dollar weakness in the afternoons trading as the latest US producer Prices data was released. The Dollar seems to have recovered well, with investors looking at US stocks and Oil after Donald Trump pulled out of the Iran deal.

Economists are now expecting inflation to continue to rise above US Federal Reserve’s target of 2% in the light of higher energy prices which could also help to strengthen the Dollar, with the Consumer Price Index release for April at 12.30 today.

Clients buying dollars may get a boost this afternoon if the latest Consumer price index or inflation report falls below the expected level, especially considering we did see slightly weaker economic data yesterday. However, with so much volatility in the market I would suggest being in contact with your account manager.

For more information on how future data releases could affect your currency 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.