The US Dollar performed well yesterday, following successful discussions between Trump and China to agree trade terms. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past week.
|Currency Pair||% Change||Difference on £200,000|
The US Dollar strengthened once again yesterday, hitting a five-month high on the US Dollar index.
The US Dollar index is a measure of the value of USD against a basket of other major currency pairs. It’s a great measure as it allows the markets to gauge how strong the greenback is generally, so yesterday’s five-month high is significant.
The main reason for yesterday’s USD strength is due to reports of trade talks in Washington last week going well. The US and China appear to have put their differences aside and talk of trade tariff’s and threats from President Trump have simmered down.
At the same time Beijing has agreed to ‘substantially’ reduce the US-China trade deficit, and US Treasury Secretary, Steven Mnuchin has confirmed that the Trump administration is ‘putting a trade war on hold’.
This positive news has given the US Dollar another boost to add to the hopes of a further 2-interest rate hikes this year and faster than expected economic growth.
A member of Citi Research recently announced that the strengthening Dollar ‘reflects economic leadership shifting back towards the US’. This comment isn’t unusual in the current markets, as the US Doller has been consistently strengthening for over a month now. Citi Research aren’t confident the trend will continue longer term though, as they predicts a drop of 5% vs other major pairs over the next year as the current account deficit widens.
Perhaps the most important release of the week out of the US is Thursday’s Initial and Continuing Jobless claims, which are released at 1.30pm. Much of Trump’s focus is on jobs so I expect the figures to be watched closely, with potential market reactions if the figures deviate from expectations (216k Initial Claims and 1.769m Continuing).
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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