The pound fell sharply yesterday after the UK inflation rate jumped from 7% to 9% – its highest level since 1982.
Fears that President Donald Trump will be unable to ever implement the bold fiscal stimulus and tax reform plans he promised on the campaign trail resurfaced to weigh on the US dollar last week. Trump was once again struggling to get his replacement for the Affordable Care Act (ACA) - more commonly known as Obamacare - through Congress. After another failed attempt to find the support it needed, the bill was declared ‘dead’ by many commentators, although Trump is unlikely to give up just yet.
Markets continue to judge that if Trump cannot get his healthcare plans implemented - despite his party strongly disapproving of the ACA which they would be replacing - it is unlikely his more controversial fiscal reforms would garner the support they need.
Global appetite for more risky assets declined sharply on Thursday, allowing the US dollar to recover some ground as markets rushed for a safer investment. USD was further supported by the latest leading indicator figures. These combine current economic data to estimate the trajectory of the economy going forwards. Rising from 0.2% to 0.6% in June, the indicators suggest an uptick in economic activity.
The US data calendar is back on form this week, promising numerous high-impact releases. The highlight of the week will be the latest Federal Open Market Committee (FOMC) interest rate decision. No changes to borrowing costs are likely, but the FOMC could give clues as to whether it plans to raise interest rates again this year.
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)