Is the US Dollar set for a tough run in 2019?

GBP USD Exchange Rate Breaks Above Key 1.37 Resistance Level

Sterling has made further inroads against the USD this morning, following on from yesterday’s positive gains. GBP/USD rates have moved to a morning high of 1.2671, with the Pound trading a cent and a half higher than it was at this time yesterday.

The USD saw a sharp selloff yesterday following Apple Inc.’s warning that weak Chinese sales were going to negatively impact their Q1 turnover this year. The Dollar’s drop in value was also heightened due to thinner trading conditions on Wednesday, as the markets clicked back into gear following the festive slowdown.

Whilst some analysts will argue that this is nothing more than temporary blip for the greenback, which was one of 2018’s best performing currencies, is the US economy and ultimately the USD set for a tougher run in 2019?

Whilst USD sellers have experienced unprecedented levels of success in recent months, falling oil prices and holes in US President Donald Trump’s tax reforms have developed into worrying undertones. With the markets becoming concerned as to whether the current economic prosperity can continue, I would be wary about assuming that last year’s positive trend for the USD will continue at the same pace in 2019.

The US stock market continues to show losses, which have set alarm bells ringing. It is interesting to note that President Trump has been quick to point the finger of blame at the US FED, despite being more than happy to take credit when it reached its loft highs in the first half of 2018.

Looking at the FED’s economic outlook and they certainly expect growth to slow this year. This is likely to be the driving factor behind their decision to take a more dovish approach to further interest rate hikes this year.

Today’s Non-Farm Payroll figures could prove very informative and could set a negative tone should they confirm any slowdown in the jobs market. The figure predicted is expected to show an improvement from last month’s 155k, up to 177k, but if this does not come to fruition, we could see a further selloff of USD currency positions.

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