During Jerome Powell's first address to Congress yesterday, his bullish comments lent significant support to the Dollar which performed well against its counterparts despite disappointing economic data released in the morning. 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 month.
|Currency Pair||% Change||Difference on £200,000|
The new head of the Federal Reserve Jerome Powell made his first address to Congress yesterday and confirmed the US economy “remains strong”.
During his speech, Powell's bullish position helped support the USD, which found support against both Sterling and the Euro throughout trading during Tuesday afternoon. GBP/USD rates hit 1.3886 and EUR/USD fell to 1.2214, with the greenback once again finding plenty of support below 1.40 against the Pound.
1.40 has now seemingly become a key threshold for the pair and whilst the Pound was well supported last week, the USD has once again fought back.
This improvement was clearly linked to Powell’s stance on the US economy and his comments regarding prospective interest rate hikes over the coming months. He alluded to further rate hikes, albeit gradual increases, in line with his personal outlook, which has strengthened since December.
The USD improvement came despite some poor US economic data, in the form of Durable Goods Orders & Trade Balance figures. Both came out well under the market’s expected result, which could have put pressure on the greenback, had it not been for the central bank's positive outlook
Powell’s appointment was cloaked in controversy due to his apparent close ties with US President Donald Trump. However, the new chairman managed to avoid adding further fuel to the fire by avoiding any politically charges questions.
The FED is expected to raise interest rates three times this year and this is likely to be priced into the USD’s value by investors, at least to some extent. Were this not to occur then we could see the USD come under pressure over the coming month’s but as it stands everything is looking fairly positive for those clients holding USD currency positions.
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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