The US Dollar had a positive end to last week following news that 164,000 new jobs were added in the US in April, while wages rose 2.6% year on year and the unemployment rate dropped to 3.9% - a near 17-1/2 year low. The Labour department's report from last Friday showed that wages rose last month - average hourly earnings rose 0.1% in April after a 0.2% increase in March.
However, the most important thing for the Dollar seems to be that more Americans now have jobs than in previous years. The Fed - last hiked interest rates in March and - has forecast at least two more increases for 2018 and I expect the Dollar to continue showing signs of strength in the coming week.
The table below shows the difference you would have received when buying £200,000 at the high compared to the low over the last month.
|Currency Pair||% Change||Difference on £200,000|
Last Friday the Whitehouse announced it would receive the South-Korean President Moon Jae-in on May 22nd to discuss the upcoming summit between President Trump and North Korean leader Kim Jong Un, expected to be at the end of May or beginning of June. Events involving North Korea are particularly worth keeping an eye on - will the US and its allies near Korea be able to negotiate a peaceful agreement and under what circumstances?
China's Vice Premier Lui He will visit Washington this week to resume talks with the Trump administration after negotiations at the end of last week failed to produce an agreement. However, both sides agreed to continue discussions. Trump wants to address intellectual property theft and other trade policies which it considers unfair. The US President has threatened to impose tariffs on up to $150 billion of Chinese import goods over allegations that Beijing misappropriates American technology. China has said its own retaliatory tariffs on US goods including soybeans and aircraft will go into effect if the US duties are imposed.
As discussed in the Sterling section, Trump will reveal his Iran nuclear decision today at 7 pm UK time. I am hopeful that the deal will still pass however I expect that Trump will allude to some changes to the agreement, stricter controls an regulations for Iran, for a longer time period. Should the deal go through, I believe the Dollar would strengthen and; if it were to fall through, I would expect the Dollar to weaken and questions are asked of Mr Trump.
Yesterday's Consumer Credit change was released by the Board of Governors of the Federal Reserve. It is the amount of money that individuals borrowed month on month and came out with a low reading, which is seen as slightly negative for the Dollar. The main influences of the week are this morning's Federal Reserve Speech by Jerome Powell as well as CPI (Consumer Price Index) figures. The latter will be released by the US Department of Labor Statistics.
With international politics and plenty of macroeconomic data being released this week in the USA, the Dollar will be volatile if events go against it, however, I expect it to build from last week and strengthen further. If you need to exchange Dollars I recommend you get in touch with the team here at Foreign Currency Direct, you can call our trading floor on 01494 725 353.
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