Inflation and Retail data key for US Dollar rates

Today the most important news for the US Dollar is this afternoon’s Inflation and Retail Sales figures. Due at 13.30 they will carry extra attention since the recent wage growth data 2 weeks ago. Essentially the market is closely monitoring just how US wages are performing versus changes in Inflation. Retail Sales will also form part of this analysis. Clients interested in GBPUSD should also keep an eye on comments from the Boris Johnson speech which could see movement on the cable pair.

The table below shows the difference you would have received when buying £200,000 with US Dollars at the high compared to the low over the last month:

Currency Pair% ChangeDifference on £200,000
GBPUSD5.63%$15,520 USD
US worries coming

The US Dollar has been stronger lately as concerns over a stock market correction, crash or worse arose. As widely expected the markets have regained composure and after a recovery yesterday the losses incurred now only put the US Dow Jones and back to where it began 2018. The US Dollar is a safe haven currency and will react to shifts in global sentiments to risk.

The US Dollar therefore rose in value over the stock market concerns but have gently softened again. Such news is a driving factor on US Dollar exchange rates but there are other issues driving the volatility on US Dollar rates. Notably the prospect of raising interest rates in the United States by the Federal Reserve Bank, next month. New Federal Reserve Chairman Jerome Powell spoke publicly yesterday hinting the process of ‘gradually normalising' interest rates would continue.

Stock market volatility could be a sign of the future

Whilst is has calmed down, the stock market volatility is by no means over and as the Fed continues this process of normalisation, raising interest rates, financial markets will continue to monitor for any negative effects.

Donald Trump has just embarked on a massive tax plan which will reduce the government’s tax take, this could push up inflation even more as consumers have more disposable income.

With Trump’s key goal to dramatically accelerate growth in the US there could be unknown future consequences. For now, investors have little to be overly concerned with, the Eurozone is growing and its political risks have not escalated as many had feared. Even Brexit is pointing in the right direction following the Withdrawal agreement from December.

The reaction of the US Dollar from this recent shift and wobble on stock markets should be noted, it could be a warning of future events and behaviours we could see on US Dollar exchange rates.

It seems likely the current uncertainty in global stock markets will be short-lived, the global economy is growing at a healthy pace and whilst many stocks are potentially overvalued, there is not enough other concern to warrant a full-on crash.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.