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US Dollar Exchange Rates Rise on Hawkish Fed Minutes

Published: 23 Aug at 10 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling (GBP)

The Pound has fluctuated in value today, making losses against the Euro and US Dollar but advancing against the Australian Dollar.

This varied movement comes before the release of high-impact government impact papers, which will detail plans on coping with a no-deal Brexit outcome.

Sterling’s decline before the documents come out suggests that GBP traders are either already worried about the quality of the plans, or fear that a no-deal Brexit is likely.

Confederation of British Industry (CBI) distributive trades data is out shortly – this measures overall changes to UK retail sector activity.

The reading is tipped to shift from 20 points to 13; such a result would still mean retail sector growth, but a lower score could lower demand for the Pound.

Euro (EUR)

A mix of Eurozone PMIs has led to similarly diverse Euro exchange rate movement today – the single currency has risen against the Pound but fallen against the US Dollar.

August’s initial Eurozone composite and services PMIs have risen as forecast, but manufacturing sector activity has reportedly slowed by more than expected.

The Euro could make all-around losses this afternoon, if August’s consumer confidence flash shows a larger negative reading.

US Dollar (USD)

The US Dollar has steadily risen against the Pound and Euro today, thanks to Wednesday evening’s Federal Reserve minutes.

Covering the Fed’s meeting in early August, the minutes have revealed that policymakers are planning to keep raising interest rates in 2018, provided that the economy continues to grow.

President Donald Trump recently criticised the Fed for raising interest rates, but the US Dollar advance seen today suggests that traders are eager to see another near-term rate hike.

The US Dollar might be devalued by this afternoon’s PMI flash data for August – the month’s composite, services and manufacturing activity readings are all forecast to show a slowdown.

Australian Dollar (AUD)

Continued political tensions have weighed on the Australian Dollar today, leading to losses against the Pound, Euro, US Dollar and other peers.

Prime Minister Malcolm Turnbull has faced a crisis in his own party, following an attempted leadership challenge earlier in the week.

Mr Turnbull has stated that he will hold a meeting on Friday to determine whether he is still has support, so tensions are high due to a possible change of leadership.

There is no additional Australian economic data out this week, so future Australian Dollar movement might be determined by any sudden change in the US Dollar’s value.

New Zealand Dollar (NZD)

Like the Australian Dollar, the New Zealand Dollar has been in low demand today which has led to losses against the Euro, Pound and US Dollar.

There hasn’t been any NZ economic data to cause this decline, so the NZD losses are instead down to a stronger US Dollar lowering risk sentiment.

The New Zealand Dollar could continue to trade poorly later today if July’s NZ trade balance reading shows a forecast-matching deficit expansion.

Canadian Dollar (CAD)

Today’s Canadian Dollar movement has been mixed, showing tight trading against the Pound and Euro but a drop against the US Dollar.

The latest Canadian economic news has been similarly inconsistent; monthly retail sales in June have slowed but the pace of annual sales growth has accelerated.

The next Canadian economic data isn’t out until next Thursday (30th August), so before then a strong US Dollar could weaken the CAD or a USD decline could strengthen the Canadian currency.
As of Thursday, 23rd August 2018, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.11, GBP USD exchange rate was 1.281, GBP AUD exchange rate was 1.7681, GBP NZD exchange rate was 1.9305, and GBP CAD exchange rate was 1.6769.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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