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You are here: Home / US Dollar / Will an Interest Rate hike from the FED push the US Dollar even higher?

Will an Interest Rate hike from the FED push the US Dollar even higher?

August 19, 2016 by Joe Wright

Will an Interest Rate hike from the FED push the US Dollar even higher?

us-dollar-exchange-rate-upDespite the US Dollar going from strength to strength over this course of the year, it could be that the Dollar gains even further over the course of the year as talk of an interest rate increase by the Federal Reserve bank heats up.

In a financial world of uncertainty investors have flocked to the US Dollar, particularly in the immediate aftermath of the UK publics ‘Brexit’ vote. This has pushed up the greenbacks value to levels not seen in 31 years when compared with the Pound, yet according to some anlaysts the move could go even further.

After initially planning on hiking Interest Rates 4 times throughout this year the plans have failed to materialise, yet with Fed monetary policy voting member William Dudley’s recent bullish talk regarding the US economy and its improving jobs market, there is now optimism that the rate increase could come as soon as September.

Should there be a rate hike stateside this year I’m expecting the US Dollar to strengthen even further, but I think that the voting members will want to see an increase in inflation before doing that which isn’t easy with some a strong currency so it’s becoming interesting as to how the USD will perform as the year goes on.

Next week there will be some important economic updates out of the US. Existing home sales will be released on Wednesday offering us an idea of how the property market is performing, then on Thursday Initial Jobless claims and Durable Goods Orders will indicate how the job market and business conditions in the US are currently.

Filed Under: US Dollar Tagged With: Federal Reserve Bank of America, GBPUSD, interest rates

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About Joe Wright

Joseph Wright brings a wealth of experience on the currency markets. He has worked in a number leading financial services organisations over the last seven years - working within a range of products including foreign currency exchange, equities and derivatives.

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