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Currency Market Analysis

May 23, 2019 | Currency Market Analysis

Global Themes

Greenback stronger as Fed stays “patient”

The USD remained stronger with the overnight report from the US Federal Reserve providing further support to the recently stronger US dollar.

The greenback has been helped by the US’s relatively high interest rates and the solid performance of the US economy.

Overnight, the Fed signalled that it is happy with the current state of the US, saying: “sustained expansion of economic activity, with strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective[…]are the most likely outcomes.”

As a result, market presumed the Fed is unlikely to move rates – either up or down – in the medium term. The US dollar drifted higher.

Just a little patience

The GBP fell as renewed Brexit tensions made prime minister Theresa May’s future less certain.

The Canadian dollar lost ground as oil and copper prices fell.

PMI numbers

Looking forward, the major focus will be on global manufacturing gauges.

The PMI numbers provide an up-to-date reading on key manufacturing markets with the German and US numbers both closely watched.

For the euro and the British pound, the upcoming results of the EU parliamentary elections will be critical.

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