The US Dollar continues to strengthen against the Pound and Euro but is it caused due in most part to its safe-haven status? Economic releases have been mixed and the FED are yet to fulfill their hike promise.
Markit (a well renowned global financial information company) recently noted that the sharp drop in the value of the Pound due to the Brexit is helping UK manufacturing exports to expand at their fastest pace in two years. I don’t expect to hear of any similar statements regarding the US and the USD anytime soon as the Greenback has gone from strength to strength recently.
These gains have been mostly due to the currencies status as a safe haven currency in my opinion as although the US has a very low unemployment rate (4.9% in June of this year).
Non-farm payroll figures massively disappointed recently and the likelihood of the Fed reserve raising rates this year is looking more and more unlikely despite the originally planned four hikes, as so far the US economy hasn’t warranted the increases.
For this reason I expect the Dollar to fall quickly once risk sentiment returns to the marketplace, and I think that clients with a USD to GBP currency requirement could consider taking advantage of the current levels as it’s been a long time since they were this attractive, and they may not remain at these levels for much longer.
The key events this week are Tuesdays Services PMI for July along with consumer confidence figures for July also, and both figures will be released at 3pm UK time. The Federal Open Market Committee meeting starts on today and concludes on Wednesday, and along with the PMI releases this meeting is likely to create elevated volatility and bigger movements within financial markets. I’d suggest contacting your assigned broker if you wish to trade outside of these times.
Late yesterday evening news broke that Donald Trump has come out of his convention ahead of Hillary Clinton in the race for the White House. I expect the running for presidency to effect exchange rates as the year progresses with many economists hoping that Hillary Clinton comes out on top.
Thank you for reading my US Dollar currency report, if you have any questions about USD exchange rates our brokers would be more than happy to discuss them with you. Call our trading floor on 01494 725 353.
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