US Dollar continues to dominate

This week’s US focus is still very much driving the market, with some quite substantial moves overnight following the FOMC’s minutes release yesterday evening – the minutes were very much more hawkish than expected. Many spectators had been expecting further calls for asset purchases and hence injections of equity into the markets, but while some FOMC members did call for this, a surprising amount feel the asset purchase programme will come to an end much earlier than expected.

From the minutes: “A few members thought asset purchases would likely be warranted until the end of 2013, while several others thought that purchases were likely to slow or stop well before the end of 2013”.

This coupled with the fiscal cliff resolution, has had a very positive effect on US Dollar strength, with the GBPUSD rate dipping by around 3 cents in the last 2 days.

US focus is again likely to continue today with the biggest US monthly release – Non-Farm Payrolls – due out at 13.30. Expectations are that 150k new jobs will have been created. Anything below this and the Dollar may weaken off, allowing other currencies, particularly the Euro, to make some gains. But on the flip side if the figure is at or even above 150k, then the Dollar’s resurgence will likely continue.

There are other data releases this morning, including Services PMI for much of Europe as well as the UK, where we also have some money supply and mortgage approval figures to digest. But eyes are firmly trained on the US and lunchtimes data is likely to drive the Dollar’s position for much of the coming month.

As ever stay in close touch with you CI account manager to see what all of this means for your upcoming currency purchase.