The Dollar’s value has been very changeable recently, moving by over 2 cents in 2 weeks, 4 cents in 3 weeks and 5 cents in 6 weeks. GBPUSD rates now sit close to a 2-month high and a majority of these gains have come from Pound strength but equally some USD weakness. In the UK with the change in settlement towards Brexit the Pound has been on a run but in the US with the longest slowdown on record starting to have an impact the Dollar has been weakening also.
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The Government shut down is continuing and expectations are that this could well continue for weeks longer. A number of leading forecasters including the president of the New York Federal Reserve has warned of 'headwinds' to growth from the shutdown. Trade talks have also been continuing, US-China talks are ongoing but it would appear it has had an impact on China equally. China's Central Bank injected a record $84 bn into the country's banking system. President Trump has also been in discussions with the EU on trade suggesting that they would impose further tariffs on car imports in hope that the EU would open up to US agricultural products.
US economic data has also continues to present mixed reports. Last week US mortgage applications rose to a near 9-year high which was after a fall in rates on expectation of a slower rate of interest rate hikes from the FED moving forward. Existing house sale figures however actually showed a contraction yesterday also meaning mixed signals for the housing market. In December house sale numbers dropped by 6.6% compared to 12 months earlier.
Next on the horizon from US data is jobless figures released tomorrow at 13:30 along with Manufacturing PMI data at the same time.
Jobless figures are expected to continue to show improvements however Manufacturing PMI data is expected to show a contraction. In December the manufacturing data showed a drop to a 15-month low, this was put down to higher costs slowing production. My personal expectation is that we will see another drop-in these figures which are likely to make the USD less valuable and cheaper to buy as a result.
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