The Dollar continues to strengthen despite waging trade wars on multiple fronts. The reason for this is that during times of global economic uncertainty investors seek safe haven investments and if you are looking at currency, the US Dollar is destination of choice. There have already been rate hikes this year and there is the strong possibility of further rate hikes from the Federal Reserve during the remainder of 2018. More on driving factors behind Dollar strength, and how this is impacting cable rates below. The table shows the difference in return you could have achieved when selling £200,000.00 during the high and low points during trading on Monday.
|Currency Pair||% Change||Difference on £200,000|
Those involved in any Sterling to US Dollar trade short to medium trade should consider taking advantage of current levels. There is very little reason for optimism. Brexit clarity, which at present is not forthcoming will be needed to see any significant Sterling strength and at present it seems as though a “no deal” situation is coming closer and closer to fruition.
The situations in Turkey and China should not be ignored and as they escalate the Dollar looks like it will be the benefactor.
It is well worth keeping an eye on events at the annual Jackson Hole Symposium. Once a year academics, monetary policy experts and central bankers come together for a week to focus on world economics both now and in the future.
Probably the most anticipated point of the symposium will be Federal Reserve chairman, Jerome Powell’s speech on Friday. There is expected to be a third hike from the Fed in September, but if Powell hints at a further potential hike in December, which is certainly not out of the question we could see further Dollar strength.
The Federal Open Market Committee will review financial and economic conditions and could give an indication to potential interest rate hikes moving forward. At present it is more of a case of not if, but when. I would be surprised to see a negative outlook.
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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