This report looks at factors that may impact when the FED will raise Interest rates. As it stands, we are yet to see one of the two promised hikes.
The USD has been sitting comfortably at a 31 year high against Sterling since the Referendum result was announced just over two weeks ago, but some of these gains were reversed slightly during yesterday’s trading session when Theresa May was decided as being the new UK Prime Minister. Investors flocked to the safe haven currency after the Brexit vote, and have been waiting for some positive news in the UK to tempt them back again.
However, with the Bank of England’s latest Interest Rate decision being published on Thursday, we could see further USD gains if a rate cut, or hints towards a future rate cut, is announced. If you have a USD requirement in the near future and wish to secure today’s rate of exchange to protect yourself from such a volatile market, a Forward Contract may be something to consider, as we can help you to secure the current rates for up to 18 months.
Tomorrow afternoon Import and Export Price Index data for June will be released, and are expected to both show a fall from the previous month. Then tomorrow evening, the Federal Reserve will release their latest Beige Book report, which is released 8 times a year, and should reveal some insight into the US Economy, the current situation in the job sector, construction sector and overall banking health. The last report in June highlighted modest growth in consumer spending, wages and employment so it will be interesting to see how this compares to the latest release tomorrow.
It could potentially give us an insight into when the Fed will look to change interest rates, as the predictions fell from 4 throughout the course of this year, down to 2, then to potentially none following the news from the Referendum. If either of these releases are remotely negative, we could see the dollar weaken, and any clients with dollars to sell may be wise to take advantage of the best levels to do so since 1985.
You may wish to make the most of the 31-year high for the US Dollar, our brokers work to provide you the best exchange rate possible. Call our trading floor on 01494 725 353.
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