The pound trended broadly lower through June, the currency being primarily undermined by concerns over the UK’s economic trajectory.
At the start of the week, trade in the US dollar was mixed, as while Russia’s move to recognise the independence of rebel-held areas of Eastern Ukraine spooked investors, risk appetite quickly recovered as the initial sanctions announced by the West proved much softer than many had feared.
The ‘greenback’ then remained in a neutral range in mid-week trade amidst hopes a diplomatic solution to Russia-Ukraine tensions could still be found.
Market risk appetite was subsequently plummeted after Russia launched a full-scale invasion in the early hours of Thursday morning. The market turmoil which followed propelled USD exchange rates to new year-to-date highs.
However a market correction then saw the US dollar relinquish some of these gains at the end of the week, particularly after USD investors began to reprice their expectations for a half-percentage increase in interest rates from the Federal Reserve in March.
The news that Western powers had imposed much more damaging sanctions on Russia over the weekend saw the US dollar spike at the start of this week, although fresh hopes for a ceasefire saw these gains tempered by the start of the European trading session.
The direction of the US dollar through the remainder of the week is likely to remain dependant on the situation in Ukraine, if things continue to deteriorate then the currency is likely to catch more safe-haven bids.
Elsewhere the focus for USD investors will be on the latest US non-farm payroll figures. Could another robust expansion in US employment growth in February see the ‘greenback’ close this week’s session on a positive note?
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)