Increased concerns of a global trade war is pushing the US Dollar higher, as investors continue to move away from riskier assets. The US Dollar report below looks into how political or economic unrest can push safe haven currencies up in value. The table below shows the difference between the high and low exchange rates during trading for the last month, and displays the difference in USD you could have received when trading at these times.
|Currency Pair||% Change||Difference on £200,000|
Despite the trade tariff threats originating from the US, the USD is actually benefiting from the uncertainty due to the currency’s safe haven status. To put the US Dollar’s strength into perspective, it’s gained over 8% against the Pound in just the past 3-months making a £200,000 purchase using Dollars, almost $21,000 cheaper.
It’s also worth noting that the Pound and the Euro are now trading close to annual lows against the greenback, and the Indian Rupee hit an all-time low against the US Dollar yesterday morning.
As China and the US threaten each other with trade tariffs, the Chinese currency has lost 3% against the USD in just two-weeks, pushing the currency (Yuan) down to a 6-month low. I expect US President, Donald Trump to comment on this again soon and maybe even accuse the Chinese central bank of currency manipulation again, perhaps causing further strengthening of the USD Dollar.
I can see cable (GBP/USD) falling through 1.30 later in the year now, even if that psychological resistance level offers support initially. Not only is the Dollar stronger off the back of uncertainties but the US economy is firing on all cylinders at the moment, with the FED Reserve Bank hiking interest rates 7-times in the last 18-months to demonstrate this. Assets denominated in US Dollars are now more attractive than in other developed nations for this reason, which is likely to continue to strengthen the greenback.
The busiest time for US Dollar exchange rates today is likely to be 1.30pm UK time, as there are a number of economic updates set for release.
Perhaps the most crucial of the releases will be Core Personal Consumption Expenditure (May) which essentially covers the average amount of money that consumers spend in a month, and it’s a key indicator of inflation in the US. The expectation is for 1.9% so expect any significant deviations to result in movement for USD exchange rates.
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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