USD: tropical storm Harvey and geopolitical tensions causes US uncertainty

Just as the geopolitical tensions between the US and North Korea appeared to have faded somewhat, North Korea fired a missile over Japan on Tuesday morning. While Donald Trump’s response was initially measured – which was understandable given the havoc that tropical storm Harvey and the resultant floods have caused – the White House issued a written statement from Trump saying that “all options are on the table.” It made for ominous reading and it is difficult to anticipate exactly what will happen next.

The euro and sterling strengthened against the dollar yesterday as the chances of a US interest rate rise later this year appear to have dimmed. Concerns over the impact of tropical storm Harvey on the US economy have not helped matters either.

Today sees the release of the US GDP numbers which will give some indication as to how the US economy is doing. If the figure comes in below expectations we could see some further weakening in the dollar.

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