Last weeks, the US and China both impose further tariffs on imports. However, concerns over trade and other downside risks to global growth are being swamped in a tsunami of robust data on the US economy. As a result, markets expectations are moving closer to the Fed’s view that rates will need to continue to rise until 2020. Markets are now pricing in two rate hikes for 2019, on top of the two that the Fed is expected to make in the next 2 months. This would take the rate up to 2.875%. Last year's market consensus was that US rates would stop around the 2% level!
Recent concerns have recently eased somewhat about emerging markets. However, as a specialist currency provider to Africa, we will keep watching closely the effect of rising US interest rates on emerging market currencies - especially over the next 2 years.
See you next week! To discuss how the above may affect you, please contact your Currency Dealer at Heritage Pay on +44 (0) 203 858 7274.