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Weekly roundup: Chaos in the White House undermines earlier US dollar gains

currency-newsWeekly roundup: Chaos in the White House undermines earlier US dollar gains
The US dollar was largely able to rise last week as the outlook on the economy and interest rates recovered from poor inflation data released before the previous weekend. However, chaos ensued in the White House before the weekend, causing USD to lose some of the week’s earlier gains.

The US dollar started the week on the rebound from the previous Friday’s poor inflation data.

Relief that military tensions between the United States and North Korea seemed to be abating also helped keep markets in the mood for the US dollar, as disappointing Chinese data made currencies like the Australia and New Zealand dollars unappealing.

Tuesday’s advance retail sales figures pushed USD higher after June’s growth was revised out of contraction to 0.3% and July saw double the rate of sales growth forecast at 0.6%. This helped odds of an interest rate hike in December, which had taken a severe knocking after the CPI data the previous week, to climb again.

These bets helped keep USD on solid form on Wednesday, even though the latest housebuilding and construction permits data disappointed.

However, markets were unsettled on Thursday by the latest comments from President Donald Trump in response to the events in Charlottesville, where one woman died and many people were injured after a man drove his car into a crowd of people gathered to protest against an alt-right rally.

Trump on Monday claimed there was violence on many signs, which drew harsh criticism for its failure to explicitly single out white supremacists. On Tuesday, Trump bowed to pressure and condemned groups such as neo-Nazis and the KKK. However, on Wednesday, Trump spent much of a press conference intended to discuss infrastructure plans to attacking the ‘alt-left’ and claiming ‘there was blame on both sides’.

This caused numerous CEOs to announce their resignations from his business advisory councils, to the extent where Trump was forced to disband what was left of the three panels. He is now without an advisory body on infrastructure, which caused USD to slump on Friday on fears his economic stimulus plans are now in tatters.

It is a rather quiet week for the US in terms of data until Friday, when durable goods orders for July are set for release. Federal Reserve Chair Janet Yellen will speak at the highly-influential Jackson Hole policymaker conference, so the markets may receive some direction on interest rates.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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