The Dollar has had a really positive day of trading against both Sterling and the Euro, with a gain over 1% against both during the Tuesday trading session.
This is mainly down to higher than expected inflation numbers, overall CPI (Consumer Price Index) figures were released at 8.3% as opposed to expectations of 8.1% and given the Federal Reserve’s robust stance on interest rates this has heightened the chance of further aggressive rate hikes in the months to come.
For those that are not regular readers of this site, an interest rate hike is generally seen as positive for the currency concerned and a cut in rates can be seen as negative. The hike leading to a boost for the respective currency (in this case the Dollar) is down to the fact that is makes it more attractive to investors.
With the Dollar also known as a safer haven, we are witnessing a concoction primed to strengthen the value of the Dollar. Global uncertainty, energy prices soaring, recessions closing in and a war all are factors that would strengthen the Dollar in normal circumstance, add to that the Federal Reserve increasing interest rates at a faster pace that other Central Banks and it would be no surprise to see the Dollar continue the charge against most majors.
UK Inflation is released tomorrow morning and it is often said that when the US sneezes the UK catches a cold, so a strong figure posted by the UK could help the pound fight back for similar reasons to the above, however Sterling has very little safe haven status these days so seems to be swimming against the tide somewhat in the current market.
If you have the need to buy or sell Dollars wither for a personal or business transaction and you wish to discuss what lies ahead then feel free to contact me (Daniel Wright) personally on [email protected] and I will be happy to contact you for a chat.