Dollar bounces after solid US durable goods and consumer confidence data

Good Afternoon,

The USD has pushed to a 13-year high following the release of a raft of much better-than-expected US economic data.

Figures showed that US durable goods rebounded heavily in October and consumer sentiment has boosted following the election of Donald Trump. These numbers corroborate recent bullish data on housing and retail sales.

This has led the market to believe that a rate hike by the Fed next month is almost guaranteed, and it has also pushed up expectations for further rates hikes next year. Rising interest rates are attractive to investors, due to bigger yields, therefore the USD become more in demand.

In other news,  Sterling firmed following Phillip Hammond’s first Autumn statement. There were no major surprises and the general message was not that different to his predecessors. A commitment to invest more heavily into ramping up productivity levels has been seen as a nice positive. The UK economy has so far shaken off the big surprise Brexit vote and Sterling’s fall seems to have hit its lows for now. It will be difficult to make longer-term forecasts until we see how the negotiations get on with our EU counterparts.

The Euro has continued its downward trend as market fears over the upcoming political risks increase. Concerns over similar political upheavals seen in the UK, and more recently the US , are becoming more apparent as next year’s German and French elections get closer.

As a result, the EUR/USD rate has dropped to nearly a 12-mth low after falling over 1% today. The GBP/USD has been volatile today but remain fairly buoyant around the 1.24 mark. The GBP/EUR has pushed up over 1% and now trades around a 10-week high.