US Dollar exchange rates back in driving seat

Tuesday’s trading delivered a very similar day to Monday, with a continuation of lower US Dollar exchange rates, weaker Euro and flat Sterling with an absence of any data or figures out in this final week of September.

US Dollar exchange rates

Cable exchange rates hit peak short term levels last week, the highest buying levels seen before the Uk Referendum. With rates unable to push any higher due to significant long term trend resistance, the US Dollar has been back on the front foot this week, gaining another cent against both the pound and the Euro in yesterday’s session. The Federal Reserve remain the most likely central bank to raise rates next, with December being the current highest possibility of this happening.

Euro exchange rates

The strength in the US Dollar this weak means that the Euro has been weaker and this has helped GBP/EUR exchange rates remain stable at the best buying levels seen since July. The Euro has suffered in recent days as Angela Merkel struggles to do a deal to form a majority government after the German elections on Sunday. Rates are now up by nearly 7 cents in just 4 weeks, a saving of over £11000 on €200k property. Having improved so quickly, GBP/EUR is currently consolidation in a sideways pattern and downside movement remains a risk until we see rates push above 1.1435 (July’s high). It is worth nothing much of Sterling’s gains has been simple speculation about a possible rate hike, and could therefore quickly unwind if the BoE do not follow through with this in the coming months. This could easily be the case if inflation levels were to drop again between now and November’s meeting.

The Day Ahead

Today is another quiet day for data, with the main release coming from New Zealand  tonight at 9pm with their latest Interest Decision, expected to hold for another month at 1.75% base rate. US Figures for Durable Goods and pending home sale will be announced at 1:30pm but tend to have little impact on the markets. Speeches from central bank members in the coming days will be the main currency news to watch out for before October kicks off next week.