What you should know about the US dollar
All eyes on the reaction of the US Federal ReserveThe Federal Reserve has indicated since last year that they would push on hiking interest rates, but the likelihood of this is waning, with the next move estimated to come next year instead.
Muress says of the Federal Reserve in the latest OFX Currency Review: ‘having raised rates in recent months, it [The Fed] would have some space to cut. Whether this would be enough to save the economy from a downturn remains to be seen.’
As the US economy continues to slow as a result of the trade war and ongoing uncertainty about interest rate cuts, all eyes will be on the Reserve to see how it reacts and whether it will be enough to stave off a full recession.
What this means for businesses and their trading opportunitiesWhile the impacts of the trade war have seen the US dollar move more favourably, this is bad news for companies buying goods and services from America. It’s best to speak to a currency expert to discuss how you can protect your business position if it’s exposed to the US dollar.
With the current state of the Federal Reserve, any continued slowing of the US dollar could see more businesses shun riskier assets. The US also isn’t the only economy slowing, with China and Europe in the midst of slowing down, this may well translate into slower growth of US exports.
Not to mention that all three are regions that power the global economy, so slow movements in each is likely to have an impact on businesses with main suppliers and/or customers in these regions.
All this means that staying on top of market movements using tools like Rate Alerts, Daily or Weekly Market Commentary from currency specialists or Forward Contracts (to secure a rate now and transfer later), are all favourable options for businesses moving forward in this time of uncertainty.