US Dollar Strong as the Federal Reserve more confident towards US Interest Rate Hike for this Year 2017Uncategorized
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Sterling realised significant losses yesterday amidst fresh uncertainty based around possible divisions in the Conservative government.
Investors have become increasingly concerned that Theresa May could be ousted from her position as the U.K. prime minister after her speech on Wednesday, which failed to impress some of the most senior members of the cabinet.
This has heightened expectations of other Conservative members such as foreign secretary Boris Johnson coming into power by as early as the end of the year. Johnson who played a key role in the leave campaign is likely to push for a harder Brexit which would involve severing all economic and political ties with the bloc.
The dollar continued its bullish run yesterday as strong data from the U.S fuelled speculation of a rate hike by the Federal Reserve in December.
The U.S. Labour Department yesterday revealed that the number of individuals who filed for unemployment insurance for the first time during the past week fell from 272,000 to 260,000. Market analysts had originally expected the figure to drop by only 6,000.
The gain in USD was also in part due to hawkish comments from the Federal Reserve Bank President for Philadelphia, Patrick Harker despite his downbeat outlook for the economy in the coming months.
Speaking on the side-lines of a Fed conference in Texas, Harker yesterday revealed that he expects three rates next year, after one more in 2017. He did however mention that the U.S. will remain stuck with 2% growth until lawmakers come up with a tax plan to stimulate the economy.
Harker spoke with reference to the GOP tax overhaul under which the Trump administration will slash corporate taxes, reduce tax brackets for individuals and cut taxes for the middle class. The current proposals are expected to bring at least 3 percent growth to the economy which has struggled to break out since the financial crisis. Harker still believes that the Fed will maintain its fairly aggressive monetary path in 2018.
13:30 USD: Average Hourly Earnings m/m; Forecast at 0.3% from a previous of 0.1%
13:30 USD: Non-Farm Employment Change; Forecast at 82K from a previous of 156K
13:30 USD: Unemployment Rate; Forecast to remain unchanged at 4.4%