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29th April 2024 | US interest rate decision…

Today’s Headlines:

  • Volatility Looms: Fed’s decision may spark uncertainty in markets. Potential for increase in market volatility as investors speculate on the outcome from the Federal Reserve’s interest rate decision.
  • UK Services Data Release: Crucial release to determine UK economic performance. Examine the significance of the upcoming UK Services data release and its potential impact on the pound’s trajectory, especially regarding future interest rate decisions.
  • US Jobs Report: Non-Farm payrolls drive currency moves. Explore the influence of the upcoming US Non-Farm Payrolls data on currency markets, emphasizing its role as a key indicator and market mover.

In Depth: This Week’s Market Update

Financial markets are eagerly awaiting the US Interest Rate decision scheduled for Wednesday this week. Whilst analysts do not anticipate any changes in interest rates, there’s uncertainty surrounding when the United States might eventually initiate rate cuts, leading to unexpected movements in the FX market.

It’s crucial to note that the performance of the US dollar has ripple effects on many other currencies, including the pound and Euro. In the past week, the US dollar has experienced a mixed performance, partly due to disappointing US GDP numbers, signalling a faster cooling of the economy than previously anticipated. However, US Inflation was shown to be rising more than expected, potentially delaying cuts further.

Despite the US dollar’s recent strength, which saw it reach six-month highs against the Euro and pound, heightened volatility could be on Wednesday and Thursday. During these periods, the currency market will attempt to anticipate the actions of the US Federal Reserve and the timing of potential interest rate cuts.

On Friday, attention will shift to the latest UK Services data, which represents over 80% of economic activity in the UK. This data can impact the pound, potentially shaping expectations for interest rate cuts when the Bank of England convenes next week.

The week concludes with the release of the latest US Non-Farm Payrolls data, a crucial piece of US data known for its potential to deviate from predictions. Similar to the events on Wednesday, this data release may influence various other currencies, including the pound and Euro.

Explaining Non-Farm Payrolls data: Non-Farm Payrolls data refers to the number of jobs added or lost in the US economy, excluding jobs in the farming sector, government, and certain other industries. It is considered a key indicator of the health of the US labour market and broader economy. Higher-than-expected job growth typically strengthens the US dollar, while lower-than-expected growth may weaken it.

For an in-depth discussion of your situation and how we can manage FX risk for your future currency transactions, speak to our friendly and trustworthy team about what you need to know and how we can assist you.