The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
The sacking of President Trump’s media chief Anthony Scaramucci after just ten days in office heightened fears that an unstable government will prevent Trump introducing the tax reform and infrastructure spending plans that were so integral to his election campaign.
The White House controversy left the US dollar struggling for much of last week, allowing GBP/USD to advance to a ten-month high.
However, the situation brightened for the US dollar on Friday as better-than-forecast domestic jobs figures upped the odds of the Federal Reserve increasing interest rates for a third time in 2017.
According to Reuters; ‘US employers hired more workers than expected in July and raised their wages, signs of labour market tightness that likely clears the way for the Federal Reserve to announce a plan to start shrinking its massive bond portfolio. The Labour Department said on Friday that nonfarm payrolls increased by 209,000 jobs last month amid broad-based gains. June's employment gain was revised up to 231,000 from the previously reported 222,000.’
The US dollar surged in response to the non-farm payrolls report, advancing on the pound, the euro and higher-risk currency counterparts like the Australian dollar.
Most of this week’s high-profile US reports are due out just before the weekend, with Friday’s inflation figures likely to have the most influence on USD exchange rates.
Annual inflation is believed to have risen from 1.6% to 1.8% in July, with inflation excluding food and energy projected to remain at 1.7%.
As rising inflation would support the case in favour of the Fed raising interest rates in the near future, a better-than-expected result would be USD-positive.
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)