Comments to CNBC yesterday by US Treasury secretary Steven Mnuchin suggested that the US China trade deal is getting closer and that in his mind it is currently 95% complete.
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This gave the dollar a little strength in yesterday morning’s trading session along with being a positive market mover for ‘riskier’ currencies as global investors approach to take on risk increased.
One thing to be wary of is that for quite some time the UK and EU were touted as 90% of the way to completing a deal but realistically it was the final 10% that neither side would budge on, leading to the situation that presents itself today. With this in mind clients should be cautious in terms of expecting an imminent agreement but at least the signs are positive.
There are growing expectations of an interest rate cut from the Federal Reserve and the next decision is due on July 31st so there will be plenty of speculation over the next few weeks in the lead up to the decision.
Economic data will be key as to what the Fed decide to do, and we have a couple of important releases over the next week or so which could sway the Fed one way or the other.
This afternoon we have growth figures, recent economic growth has been fairly strong for the U.S and expectations are for annualised growth to remain at 3.1%.
Next week Wednesday and Friday may well be the key dates to put in your diary. On Wednesday we have key manufacturing and unemployment data with jobless claims and ISM manufacturing being released. As we move on to Friday we have mainly unemployment figures, with unemployment expected to remain at 3.6% and a rise expected in Non-Farm Payroll data.
Non-Farm payroll data can be quite a market mover, as this measures the number of people involved in non-agricultural employment (due to seasonality) and analyst’s predictions can be widely wrong. With the market moving on speculation as well as fact the market may move quite quickly to correct itself, so this could potentially lead to volatility for dollar exchange rates straight after it is released.
To contact one of our experienced brokers to discuss dollar exchange rates feel free to call our trading floor on 01494 725353.
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