- US economy remains in shakey territory
- US stockpiles down
- Is a FED hike likely in September?
Federal market committee to provide insight into economic conditions
Whilst I personally remain skeptical about the economic conditions in the US, this afternoon’s FOMC meeting will provide better insights into the current economic climate in the US. The US manufacturing sector took massive hits to confidence earlier this month, oil stockpiles appear down, jobless claims have risen and retail sales are stagnant. Whilst the recent non-farm payroll figures have been positive, it’s difficult to forget previous releases which resulted in huge falls in expectations.
That being said, the US Dollar is arguably overvalued, the UK’s vote to leave the EU has resulted in flight to safety for safe haven currencies. This could impact US exports pushing oversea demand elsewhere.
I hold the view that this afternoon’s FOMC meeting will take a hawkish stance to current economic climates, whilst some hold on to a potential rate hike in September or December, it’s unlikely this will materialise given the upcoming Presidential elections.
US Presidential election could cause major volatility
Whilst current GBPUSD exchange rates are not overly favourable, the US election will likely cause quite a stir for the currency pair. Donald Trump continues to cause major controversy amongst the American news outlets with some labelling his “dangerous”. Given the close polls that put Clinton marginally ahead of Trump, markets will react aggressively to any changes in poll data.
With Brexit still the biggest concern to global markets, it’s likely that current GBPUSD rates will remain on the lower end for some time, I do however see opportunities for US Dollar buyers as we approach the US election. Keep an eye on rates during October and November, a Trump victory could ease some of the recent losses.