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Dollar Remains in the Driving Seat

29th April 2019 Market Update

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🇺🇸 USD –  The dollar remained the currency in demand last week this despite improving risk appetite. The buck strengthened across the board by about 1%, sending the dollar index to 4% off its 2017 highs, this suggests the dollar still has room to gain further. The dollar rally was on the back of yet more impressive economic data, first durable goods orders showed signs of consumer confidence with better than expected figures, then on Friday GDP figures showed the US economy expanding at an annualised rate of 3.2%.

This week the dollar will have scope to rise further with a bumper week. Kicking off with consumer confidence figures tomorrow followed by the Federal Open Market Committee meeting and interest rate decision on Wednesday. No move up or down is expected in the interest rates; however, we will be privy to an insight into the Feds thinking and subsequent forward guidance after their ‘wait and see’ approach adopted at the start of this year appears to have paid dividends as sentiment has improved. To close the week, we have monthly jobs figures, which, although not as crucial as they used to be can still have a large impact if drastically over or under expectations.

🇪🇺 EUR – Elsewhere Europe and the euro continues to show signs of strain. Economic figures remain lacklustre, the latest Spanish unemployment which rose to an eye-watering 14.7%! The supposed economic recovery taking place in Europe no more than a few years ago seems nothing more than a distant memory as the European project stumbles on.

A by-product of the issues facing the European union is populism. Spain became the latest to fall to a populist government as a left leaning socialist party won most seats in the Spanish elections over the weekend.

This week sees a bumper Tuesday for the Eurozone as a raft of economic figures are released from the leading economies in the EU. More lacklusture results could spell more doom for the single currency.

Please note it is a bank holiday in the EU on Wednesday so we will have no euro payments on Wednesday the 1st of May.

🇬🇧 GBP –  Sterling free from all things Brexit for the time being can revert to standard economics as a driver for the performance of the pound. This week sees ‘Super Thursday’, although the last number of instalments have been anything but Super as all eyes were transfixed on Westminster.

 

Summary:
GBP: Has taken a back seat with Brexit delay, no fireworks expected for ‘Super Thursday’
EUR: More of the same, lacklustre figures and populist governments
USD: All eyes on the Fed to see if they move away from ‘wait and see’


 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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