06/03/2017 - Rate Lift off on the cards for US FED

USD

In a keynote speech late Friday, Reserve Chair Janet Yellen left little doubt on Friday that the central bank will raise interest rates this month. Yellen also gave some indications that the Fed might end up having to increase rates this year more than initially planned.

She also spelt out the danger to the USD economy if the FED was too slow to act in raising rates.  “Waiting too long to scale back some of our support could potentially require us to raise rates rapidly sometime down the road, which in turn could risk disrupting financial markets and pushing the economy into recession” she said in her speech.

Also on Friday a report showed that  US services experienced a slowdown in February, as growth dipped to a five-month low with companies becoming more cautious about spending and hiring. Markit's US services purchasing managers' index (PMI) fell to 53.8. The figure was down from January's 14-month high of 55.6  but the indicator still signals healthy expansion of output for the world's largest economy.

GBP

Britain's unexpectedly strong economic growth since last June's Brexit vote may be starting to fade as inflation picks up. Slowing consumer spending started to hurt services companies in February, Friday's UK Services Purchasing Managers' Index (PMI) showed. Services PMI fell to a five-month low of 53.3 from 54.5 in January. Suggesting the economy is now expanding at pace of around 0.4 percent per quarter, much slower than the 0.7 percent expansion at the end of 2016. Sterling slid to a seven-week low against the dollar after the PMI figure was released, as expectations of the Bank of England raising interest rates diminished.

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