020 7898 0500As it stands, the Federal Reserve look far more likely to increase interest rates than the BoE and ECB. Earlier in the year, we saw the dollar weaken when Fed Chair Jerome Powell said he expected there to be only three rate hikes in 2018, but if recent events are anything to go by, that could be three more than we see in the UK or eurozone. Nothing is set in stone yet, and we could still see a UK rate hike in May, but the markets are certainly less confidence than they were just a couple of weeks ago.
The dollar is benefiting from this speculation, as well as the US Treasury yield’s recent push through the psychologically important 3% barrier. Economic data from the US has also been positive of late which has certainly not harmed the dollar’s movements. Tomorrow we could see more positive data, with the release of manufacturing PMI for April. Last month, the figure came in at 59.3 and though it is expected to dip to 58.3, that reading would still show impressive strength.
However, the highlight of this week is the Fed rate decision which we will see tomorrow. Powell might provide further indication of future economic policy and were he to allude to more rate hikes, the dollar would likely strengthen further.
