Betting on a Fed rate hike

Dollar traders are giving a rate hike by the Fed this March a 78% chance. Aside from that, the last few days have been fairly quiet for the USD.

As a side note, here’s an interesting article about the cost of weather disasters in the US and their effect on the dollar in 2017 – quite a frightening cost!

Unexpected movement for the Euro

Euro has sat back down to a ten-day low at 1.1919 after pushing towards its strongest position in three years against the USD.

It is moving in the opposite direction of what we would expect given economic data releases. For example, joblessness in the Euro area dropped to its lowest level since 2009 at 8.7%, yet the Euro was down 0.4% against its 12 closest trading currencies. This is especially prevalent in Italy where unemployment dropped to its lowest level since records began.

Other data followed suit and printed positively for the Eurozone, though the currency still devalued. It seems that political uncertainties – such as Germany’s leadership challenges – weigh heavier on the euro than the overall readings of the Eurozone’s economic strength.

Do the shuffle

Plainly, Prime Minister May’s cabinet reshuffle could be described in British parlance as a “kerfuffle”, in which we saw the resignation of Secretary of State for Education Justine Greening. The shuffles have been labeled by the opposition Labour Party as a “lacklustre PR exercise”.

Fortunately, no changes at the helm of the Brexit ship have occurred, sparing Sterling of dramatic movements. Although, GBP/USD has moved lower from nearly 1.3600 and is trading at 1.3550 at time of writing.

Outside of politics, there isn’t a huge amount of economic data for the Pound this week aside from this Wednesday’s industrial and manufacturing production release.

2018 currency outlooks

If you have an important international payment approaching in the year ahead, take a look at our Chief Economist Jeremy Cook’s 2018 currency outlooks for guidance on the upcoming 12 months.

If you wish to discuss our products and services that can help you minimize the risks of currency fluctuations, please reach out to your account manager.

Christopher Morriss, The WorldFirst Team