By Ashley Finill
Five days on from Donald Trump imposing import tariffs on numerous countries, and the markets continues to digest the drastic action taken by the US President. With a trade war seemingly breaking out there are uncertain times ahead. Since Trump announced his tariffs, many countries have hit out at the US deeming them to be unfair with Trump being unfazed by the outcry from many nations. As many as 70 countries have reached out to the White House to initiate negotiations on the tariffs but with the president ruling with an iron fist thus far, there has been no word whether any negotiations will take place yet. The EU revealed this week that they proposed a zero for zero tariff deal which was quickly rejected by the Trump administration. Regarding the currency market, the weakened dollar has clawed back its losses seen at the end of last week. Initially, sterling gained over 2 cents on the Greenback by the end of last week but has since seen a complete reversal and has now plummeted nearly 4 cents on the strengthening Dollar. The Dollar has also clawed back around 2 cents against the Euro, whilst sterling has been the loser overall as since the tariff announcements and has lost over 4 cents against the single currency.
Forward Contracts
With uncertainty surrounding a global trade war, it is likely the currency market will remain in a volatile state for the foreseeable future, and as we know uncertainty is not a friend of sterling’s. If you are due to pay deposits or complete on a property overseas then our popular forward contract option could be of interest as you can lock in for as long as 2 years in advance based on today’s rate on all major currencies, with only a 10% deposit and the 90% remaining to paid by the contract end date. This can provide peace of mind in knowing you’re within your budget and crucially removing the risk of the market going against you further during the time before the completion on your property. Speak to our team today to go through your options.
Data Today and For the Rest of the Week
With market sentiment fully being led by The US’s tariffs there are only a few data release to take note of, which could have an effect on the currency market at the time they’re released. A fairly quiet Wednesday as FOMC minutes are released at 6pm in the US. Tomorrow sees a busier day, at 12.30pm the US post Consumer Price index (inflation) and initial jobless claims, there are also a raft of speeches from members of the Fed across the afternoon. In the Evening, the US also post their monthly budget statement at 6pm and later at 10.30pm New Zealand post business PMI. On to Friday and another busy day on the data front. Starting in Germany at 6am as they post harmonized index of consumer prices, at the same time the UK post Gross Domestic Product (GDP) and Industrial & Manufacturing production. At 9.45am , ECB president Christine Lagarde Speaks. Into the afternoon stateside, the US post PPI data at 12.30pm, finishing off the week and staying in the US at 2pm Michigan consumer sentiment index will be released.