Analysts predict 90% change of December US interest rate rise

November 22, 2017 by Lewis Edmonds

Janet Yellen’s last day nears

Janet Yellen, the current Chairlady of the Federal Reserve made an appearance at New York University on Tuesday night, just weeks before the all-important Fed interest rate decision in December, where investors are pencilling in another interest rate rise in the US.

Janet Yellen gave nothing new away with regards to the Federal Reserve’s interest rate plans and left investors scratching their heads as to whether interest rates would be raised. Janet Yellen cited inflation as a major concern to the Federal Reserve and is something that many of her colleagues (herself included) can’t agree on. Markets still had the probability of a 0.25bp rate hike unchanged this morning, however these comments can’t be ignored – and as a result the US Dollar started the day ever so slightly weaker against a basket of currencies.

The US workforce shows positive signs

US jobless claims, which is the number of civilians filling for unemployment benefits fell this week after two straight weekly increases. This points to a healthy looking work force and job growth after the fallout from the recent hurricanes in the United States fed through into the labour market. Benefit claims had risen recently following a backlog of claims from Puerto Rico following damages to infrastructure also damaged by the two recent hurricanes.

FOMC minutes

Tonight at 7pm UK time the latest FOMC meeting minutes will be released. Recent reports ahead of the minutes being released have indicated that the US is likely to raise interest rates at December’s meeting, with J P Morgan putting an interest rate hike next month at 90%. An extremely productive labour market in the US is likely to outweigh any inflationary concerns, according to reports. Today’s jobless data certainly helps solidify this, but will the FOMC minutes tonight clarify this and the interest rate scheduled for December?

All eyes on the FOMC meeting this afternoon

August 17, 2016 by Rob Lloyd

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.

Oil agreement boosts value of the US Dollar

February 17, 2016 by Joe Wright

Agreement receives mixed reaction in currency market

The US Dollar was boosted yesterday as major oil producers Russia and Saudi Arabia came to an agreement in regards to oil production this year. Initially oil futures were boosted although those gains soon waned as the markets received further news that Iran was absent from the deal and the actual agreement was to freeze production to January levels as opposed to cutting production.

News of the agreement boosted risk appetite amongst investors with the US dollar rising against all other major currency pairs with the exception of the Japanese Yen, most notably hitting a two week high versus the British Pound which was trading at $1.4283, with Sterling falling roughly 1% against the Dollar.

Once news of Iran’s absence and the production freeze as opposed to production cut hit markets, the reaction was mixed with the greenback strengthening against most major currencies and yet the Japanese Yen, traditionally considered a safe haven currency, rose against the Dollar suggesting many investors were unsatisfied with the outcome of the oil agreement, leaving Iran’s intentions under the spotlight.

FOMC to take centre stage today

Later today the FOMC minutes will take place providing us with an insight into the relative health and future prospects for the US economy. This meeting could create further volatility in US Dollar exchange rates as it could outline monetary policies for the US moving forward. I’m not expecting a quiet end to the week for the greenback as Thursday also see’s inflation and employment figures releases which could create further market movements.