The below report discusses the factors that are currently impacting the USD, including global political uncertainty and a strong US economy. The table below shows the difference in US Dollars you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
The USD has found plenty of support over recent weeks, making sustained inroads against both GBP and the EUR.
USD/GBP rates are hovering around 1.33, with the greenback gaining almost 10 cents since the beginning of April. To put this in monetary terms this is an additional £10,000 on a 200,000 USD/GBP currency exchange.
The greenback now trading at some of the best levels of the past 12 months and whilst the Pound is likely to find plenty of support around and above 1.30, those clients who were holding on for further gains above 1.40 only 6 weeks ago, will now be hoping for a swift resolution to the current malaise in Brexit negotiations.
EUR/USD rates are also on the up, with the USD now trading at the best rates since the turn of the year, hitting a high of 1.1603 during Monday’s trading. With the EUR coming under increasing pressure, there may yet be scope for further improvements but how far the greenback can go, is likely to be linked to a number of key factors.
The USD itself is supported by a strong US economy and whilst President Trump’s campaign to internalise US Manufacturing & Production has been criticised for its alienation of other global economies, it seems to have given the US economy a shot in the arm since the turn of the year. More jobs are being created and the economy, from the outside at least, is seen to be thriving. This in turn has helped to support the USD’s rise but with Trump and the US FED both concerned that the USD is becoming over-valued, can the current trend continue?
Much will depend on Trump’s stances on other key matters. He has been heavily criticised for pulling the US out of the Iranian nuclear deal. This alongside his proposed traded tariffs, are unlikely to increase investors global risk appetite, which in turn could cause investors to keep their funds in the “safer haven” USD.
If his stance were to soften, then investors may be enticed into the riskier currencies such as the AUD or NZD and as such, the USD would likely weaken but to what extent, is very difficult to predict.
Personally, I am always in favour of removing market risk where possible and with the current rates looking so attractive for those clients selling USD, now could be the time to take advantage, thereby removing the Trump factor from the equation.
After Memorial Day and a sparse Tuesday, those clients with a USD currency requirement have plenty of key data releases to watch out for this week.
Tomorrow we see the release of the latest Gross Domestic Product (GDP) data, which is expected to confirm 2% growth for the first quarter of 2018. This comes in tandem with the latest Goods Trade Balance figures, which will be interesting to note considering Trump’s change policy of trying to minimise external Manufacturing of US products.
This is followed on Thursday by jobless data but it is Friday, which is likely to hold the most weight with investors. The latest Nonfarm Payroll figures will be releases, which give us an overview of the amount of jobs created inside the US economy, outside of the agricultural sector. This alongside the official Unemployment Rate, Manufacturing data and Consumer Spending, will give the markets a key insight as to whether the current feel good factor around the US economy is likely to continue.
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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