Both politics and economics are driving the dollar’s value at present. Donald Trump has once again caused a stir with his comments yesterday following a decision to back up his original stance on the Charlottetown disturbance, by stating there was ‘blame on both sides’. His comments haven’t been well received; many politicians including several fellow republicans have let their thoughts be known that far right groups should never be condoned. Many world leaders, including Theresa May have made it clear that far-right groups should be condemned. I think this could potentially spell trouble for the President with so many opposing the comments he has made.
Since the beginning of the day, the USD has given up the gains that it made yesterday following better than expected retail sales figures. Yesterday’s data helped to increase the chances of a rate hike in the US before the end of the year which is why the dollar strengthened considerably throughout yesterday’s trading.
Housing market data released today
Today however, housing market data was released and showed an unexpected drop in July. As building new dwellings is often seen as a key barometer to the economy, the dollar subsequently lost ground. Better than expected wage growth data and unemployment data for the UK helped to push GBPUSD back up from the 6 week low from yesterday.
Future data released to take note of
The key data is yet to come. Tonight, the Federal Reserve (FED) will release the minutes from their latest Federal Open Market Committee meeting, which should give an insight into the course the FED will take regarding raising interest rates. I would expect this event to cause significant volatility on USD exchange rates.