About Tom Higham

Tom Higham is Managing Director at currencies.co.uk, a leading currency exchange brokerage. He has vast experience of the currency exchange market, having previously worked as a currency broker and in related financial services roles for over 10 years. Tom has been quoted in the national press on numerous occasions, including the Telegraph, the Sunday Times and A Place In The Sun.

Key US Economic Data to be Released Ahead of Easter Weekend

March 24, 2016 by Tom Higham

How US Employment Figures Could Impact US Dollar Exchange Rates

During this afternoons trading there are a number of key economic data releases due to be announced. One of the most notable of these is initial jobless claims which is a data set showing the number of people who are filing claims for unemployment for the first time, as a result this can paint a very clear picture of the US labour market. The expectation is that the figure will increase marginally from last month by three thousand people and if the figures do come out as expected I expect that it would lead to limited movement. However, should the figure come out better than expected and follow in line with a number of the recent, strong economic data from the States could mean we see the US Dollar strengthen against most of the major currencies including potentially breaking through the 1.40 barrier against Sterling and falling into the high 1.30’s.

Along side the initial jobless claims the continuing jobless claims will be released which is predicted to show an improvement on last month with just over 2.23 million people out of employment. The number of people in employment is key for any economy and so should this figure continue to show an improvement as expected or even better than expected it could give more weight to the argument that Sterling Dollar exchange rates will drop below the 1.40 mark.

US Durable Goods Order Set to be Announced In a Busy Day for the US Dollar

At the same time as the employment figures are released this afternoon, we have the latest Durable Goods orders for the US. This data release shows the number of orders for durable goods (goods that typically do not need to be purchased frequently because they are designed to last a long time such as cars, washing machines and mobile phones). These type of products are often relatively expensive and therefore should the number of orders be high can demonstrate a strong economy and almost more importantly shows confidence in the economy.

In stark contrast to the employment figures which are expected to show an improvement the Durable Goods Orders are predicted to show a very sharp decline falling from last months figure of 4.7% to minus 2.9%. Part of this decline is likely to be attributed to a drop in orders for cars which is likely to show a drop of 1.9% from last month. If the predicted figures are accurate it could lead to US Dollar weakness however, some of this may already be priced into the exchange rates and so if the actual figures show any form of improvement compared to the expectation there is a chance we could see the Dollar strengthen.

Finally today we have James Bullard, member of the Federal Reserve Bank of America (FED) speaking and is likely to give his views on the US economy and possibly most interestingly his thoughts in interest rate movement in the US. This could again provide some volatility for the USD.

From all at currency.co.uk we wish you a very happy Easter.

USD Exchange Rates Ahead of PMI and Housing Data

February 24, 2016 by Tom Higham

It is set to be another busy day for the US Dollar (USD) with a raft of economic data due to be released. First up we have mortgage applications which will give us a good indication as to how the US housing market is performing, this is set to be followed by New Homes Sales later on in the afternoon trading session which will make the picture even clearer. The expectation is that we will see a slight decline in the number of new homes sold but with recent US data sets performing relatively well and several beating expectations I would not be surprised to see the housing figures exceed the predictions and therefore provide more USD strength.

We also have the latest set of Purchasing Managers Index (PMI) data. This data set provides an indication of business conditions in the services sector which accounts for a large part of US Gross Domestic Product and therefore is a very important announcement. It is expected that we will see an improvement in the figures and with the recent positive economic news coming out of the World’s largest economy this may really help provide yet more support for the Dollar and add more fuel to the fire that Janet Yellen and the rest of the Federal Reserve Bank of America will raise interest rates again in the coming months.

Finally, we are set for the latest Oil stocks change and with the huge price fluctuations over the previous months, this will be an interesting announcement. The States are a net importer of oil as they use more than they export and so when oil prices go up it can hamper growth in the US but when it falls it can really help the US economy flourish, so with low oil prices following the lifting of the sanctions on Iran I expect this to be a strong data set for the US and therefore could again provide support for the US Dollar.

USD Strength Following Positive Inflation Data

February 19, 2016 by Tom Higham

US Dollar Exchange Rates Strengthen Following Strong Inflation Figures

During this afternoons trading session we heard that the latest set of US Consumer Price Index figures, a key measure of core inflation came out better than expected at 1.4% which was in fact double the figure seen last month, the largest gain in 4 and a half years. This sharp jump was mainly attributed to rising rental and medical costs and gives further support to the Federal Reserve Bank of America (FED) raising interest rates again in the more short term. With the debate on when interest rates in the US will be hiked again hotting up, today’s data release will only add fuel to the fire that the FED can and will act soon.

The FED became the first Central Bank of a developed economy to raise interest rates since the global financial meltdown and as a result the US Dollar strengthened considerably as investors sought to not only put their funds into what is considered a safe haven but also to benefit from the increased returns high interest rates bring. This sudden flow of funds into the USD meant its demand increased and therefore so did it’s price pushing the Dollar to some of the strongest levels we have seen for months against the major currencies. So, with news that inflation is rising at such a fast pace the expectation that Janet Yellen and the rest of the FED will now be seriously considering another rate hike possibly even as soon as March is likely to provide the USD with further support.

Following the announcement this afternoon we have seen the Dollar strengthen against both Sterling and the Euro. All eyes now will be on next weeks Consumer Confidence figures for the States, new home sales, Durable Goods orders and then probably most notably Gross Domestic Product (GDP) figures on Friday. Should we see another week of strong data, especially with the GDP figures I would not be surprised to see the Dollar strengthen even further, potentially testing the the 1.42 levels on GBP USD exchange rates. We will find out more next week, in the meantime we hope you enjoy your weekend.

Sterling Exchange Rates Set for a Busy Week

February 1, 2016 by Tom Higham

This week there is a lot of economic data due to be announced which is likely to lead to a volatile week for Sterling exchange rates. Today we see the latest manufacturing PMI (Purchasing Manager Index), mortgage approvals and a consumer credit report. These three announcements will give a clear view of how the Replica Watches manufacturing industry, one of the key sectors of the economy, is performing, how the housing market is developing and also how strong the general public’s finances are. All three data sets are predicted to drop which could result in Sterling weakness today, however any unexpected positive movement in these numbers could give the Pound support.

On Thursday we have more housing market data and then potentially the most noteworthy announcement in the form of the Bank of England (BoE) interest rate announcement. In previous months we have seen a lone member of the BoE vote for an interest hike and with comments from the BoE Governor Mark Carney the chance of a rate hike is minimal, however, with the recent slowdown in the global economy the biggest possibility on Thursday is that the one member of the Bank of England who voted for a rate hike, Ian McCafferty, could reverse his recent decision and vote to keep rates on hold which would mean a 9 – 0 vote and therefore Sterling weakness as the chance of a rate hike becomes yet more distant.

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While I think it is unlikely this month, there is the slim possibility that due to the changing economic picture we could see a vote for a cut in interest rates something that really could see Sterling’s value fall. I do not think this will happen this month but if the global economy continues to worsen the chances of a rate hike could increase.

So, with a busy week ahead we can expect some considerable movement on Sterling exchange rates this week and all eyes will be on the BoE to see if there are any changes in the voting pattern.

Australian Dollar (AUD) Ahead of Interest Rate Announcement

February 1, 2016 by Tom Higham

This week is set to be a key week for the Australian Dollar with the Reserve Bank of Australia (RBA) due to announce their latest interest rate decision in the early hours of Tuesday morning.

While the general consensus is for rates to be kept on hold it is by no means clear cut and there are many analysts that believe we could see the RBA cut interest rates this week. The recent downturn in the global economy, especially the worsening picture in China means that the Australian economy and therefore the Australian Dollar has suffered. The Aussie economy exports huge amounts of raw materials and China is one of their largest trade partners so as Chinese growth slows so does their requirements for Australian raw materials and hence the Australian economy, which is intrinsically linked to China, suffers.

A cut in interest rates generally makes a currency cheaper as investors would receive a lower return on any funds invested in that currency. As a result, a cheaper currency means that exports from that country become less expensive and therefore more desirable which in theory should lead to more trade taking place and funds moving through the economy. However, I would question whether a cut in interest rates and therefore weakening the Aussie Dollar is enough to help the economy. If China is under pressure and growth is slowing then will cheaper Australian raw materials be enough to help encourage them to produce more and help improve their economy? I personally think the problems in China are bigger than this and likely to get worse before they get better. For Australia to recover they will need to hope that they can generate other, large trading partners and become less reliant on China. In the meantime, Australian Dollar exchange rates are likely to remain volatile with the threat of an interest rate cut looming.

UK Gross Domestic Product Improves

January 29, 2016 by Tom Higham

It has been announced that the UK economy grew in the fourth quarter of 2015 by 0.5% which was positive news for Sterling exchange rates (GBP) which strengthened in yesterday’s trading session as a result. This news means that the UK economy grew by 2.2% in total through 2015 which is a positive figure and one that should bring some reassurance for UK retailers, manufacturers and perhaps most importantly for UK consumers. The UK is now one of the fastest growing economies in the Western world, something I am sure that George Osborne and the Bank of England will take some solace from.

However, while this is positive news for the UK there was a slight dampener added by the International Monetary Fund (IMF) who stated that the strong growth the UK has witnessed is likely to slow until the global economy improves. As discussed in yesterday’s USD currency report, problems in China have started to filter through to other economies and has resulted in a slow down in growth across the world and so the UK will be one of many countries that are likely to be operating in a more challenging environment than we have seen for the last couple of years.

Since the start of the year the Pound has been under pressure and we have seen it weakening against many of the major currencies and while the positive Gross Domestic Product figures yesterday help, I do not expect Sterling to recover to the same sort of levels we saw for much of last year. In fact, in my opinion I would expect Sterling to hold relatively steady at these current levels unless there are further developments in China and other leading economies that cause shock waves in the global economy. With no sign of an interest rate hike in the UK, a challenging economic environment and the Eurozone (the UK’s largest trading partner) under pressure, I believe the UK will find it difficult to match the growth we saw in 2015 and therefore the Pound will hold around its current levels.

USD Exchange Rates: Federal Reserve Make Interest Rate Announcement

January 28, 2016 by Tom Higham

Last night the Federal Reserve Bank of America (FED) stated that they would not be raising interest rates in January due to the global economic slowdown. This announcement comes a month after the FED became the first Central Bank of a major economy to raise its interest rates but with news that China’s economy is slowing and this having a knock on effect to the rest of the world the FED now appear to be very cautious about making further moves.

Many analysts had questioned, once the FED had raised interest rates once, how soon the next rate rise would be and how much the Central Bank would hike interest rates by with some suggesting it could be as much as 3 interest rate hikes ending with interest rates up at or over 1% by the end of the year. However, with the recent downturn in the global economy the chances of further rate hikes seem to have been put back and in fact there is now the question of whether the FED will raise rates at all this year. As a result, the US Dollar (USD), has slowed its recent strength against most the major currencies although it is still very strong against both the Euro (EUR) and the Pound (GBP).

While the global economic situation will play a large part in both the FED’s and other Central Banks decision as to when they will next raise interest rates, economic conditions within their economies will be vital. The FED last night stated that they expect the job market in the US to remain strong which is vital if the Dollar is to remain strong, however the economy did slow last month but with oil prices falling so significantly and the US being a net importer of oil (they use more oil than they produce) it means a low oil price should help their economy grow.

USD Economic Data

Today we have the latest jobless figures for the States as well as housing market figures and Durable Goods orders. All three of these data sets are important and will paint a clear picture as to how the US economy is performing. These data releases are due to be announced this afternoon and there are some concerns the figures could disappoint with Durable Goods order, probably the most note worthy announcement, expecting to drop to -0.6%, a sign that the number of orders for goods that last for more than 3 years is in decline. If this is the case we could see some USD weakness following the announcement.