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Weekly Roundup: US dollar strengthens amid speculation of a 100bps rate hike

currency-newsWeekly Roundup: US dollar strengthens amid speculation of a 100bps rate hike
The US dollar got off to a strong start last week, firming as the previous week’s payroll figures bolstered Federal Reserve rate hike expectations.

A gloomy market mood then extended this upside through the first half of the week.

The publication of the latest US CPI figures then triggered another jump in mid-week trade as US inflation soared above forecast in June. This uptick in the ‘greenback’ carried the USD/EUR exchange rate to parity, before a modest correction tempered the pairing’s gains.

The US dollar then caught fresh bids on Thursday as the inflation figures stoked speculation the Fed could raise interest rates by 100bps later in the month.

However, the ‘greenback’ then faltered at end of the week as USD investors began to scale back their expectations for a 100bps hike.

This was despite a stronger-than-expected US retail sales print, something which Fed policymaker Christopher Waller suggested could incentivise him to support a larger hike.

Turning to this week, it's likely the direction of the US dollar will remain largely tied to Fed rate hike expectations and risk appetite. This could see USD exchange rates weaken at the start of the session amid a prevailing risk-on mood.

Later in the week we may see the latest US S&P PMI pile some pressure on the US dollar if they report another slowing of US manufacturing and service sector growth.
 
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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