US Dollar (USD) Exchange Rate in Upward Trajectory, Bolstered by Positive Data
The US Dollar (USD) is presently trading up against the British Pound (GBP) at 0.5906, within the ranges of 0.5898 and 0.5912. Conversely the ‘Buck’ has fluctuated between 0.7454 and 0.7480 against the Euro (EUR), currently maintaining the 0.7473 position.
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The US Dollar has seen a highly positive day on Wednesday as data releases have exceeded economists’ expectations. US Gross Domestic Product figures were published at 4.0%; much higher than the forecast 3.0%. Furthermore Personal Consumption statistics rose, presented at 2.5%, despite only being forecast to attain 1.9%.
Foreign exchange expert at the Royal Bank of Scotland Brian Daingerfield commented: ‘The main components of the Gross Domestic Product numbers look quite strong. It supports the Fed’s [Federal Reserve] base-case scenario that the economy is gradually improving. It’s quite positive for the Dollar, it just adds fuel to the fire.’
However, US Employment Change data disappointed slightly, with only 218K new work positions created in July; in opposition to the forecasted 230K. Furthermore June’s figures surprised with 281K, causing speculation that another bombshell figure could materialise this month.
Nonetheless this statistic shows the US has achieved job expansion over the 200K threshold for the last four consecutive months; boding well for the possibility of interest rate hikes in the US. Chairwoman for the Federal Reserve, Janet Yellen, recently said that upbeat employment data would drive hikes. Yellen stated that interest rates could come ‘sooner and be more rapid than currently envisioned.’
Moody’s representative Mark Zandi commented: ‘The July employment gain was softer than June, but remains consistent with a steadily improving job market. If current trends continue, the economy will return to full employment by late 2016.’
Moreover, still yet to be published is the Federal Open Market Committee’s (FOMC) interest rate decision which is scheduled for 19:00 GMT on Wednesday. Although the decision is expected to stagnate at the current 0.25%, there is hope that some clarity will be gained in the statements accompanying such important assessments.
Furthermore the Fed Pace of MBS and Treasury Purchases will be issued alongside the FOMC interest rate decision.
The US will see further fluctuation tomorrow as Continuing Claims and Initial Jobless Claims figures are announced; whilst Friday will prove even more considerable with the publication of Change in Non-Farm Payrolls, Personal Consumption Expenditure, and Unemployment Rate figures.
For now it appears the US Dollar will continue to trade bullishly in the currency market following an upbeat day of data figures; however the statements from the FOMC later today will also prove influential for the ‘Greenback’.
The Euro is currently trading at 1.3381 against the US Dollar, whilst the Pound rests at 1.6909 versus the ‘Greenback’.