FX Update

Brexit issues linger while the market waits to digest key rate policy decisions from the BoC, RBA, and RBI.  Economic releases taking a backseat.

 |  December 05, 2017

Brexit and U.S. tax reform remain focal points, along with the potential for a U.S. government shutdown. Data remains something of a sidebar this week. The pound seen pressured by fickle sentiment stemming from Brexit headlines, while Aussie led gains as retail sales data beat estimates. Various PMI data out of the euro area weighing slightly on the EUR this morning.

“Don't count the days, make the days count.”   

Muhammad Ali
  • FX Rates
    December 05, 2017

    Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.


  • USD

    The dollar has lacked direction so far today, while sterling remained under pressure and the dollar bloc units outperformed, led by AUD.  On the economic front, U.S. Trade data did little to move the currency despite showing that the deficit for Oct widened to $48.7B vs. $47.5B est.  Despite this, U.S. Treasury yields rebounded from overnight lows with the 10yr touching 2.395%.


    After poor sentiment stemming from Brexit headlines, the Pound is set for its biggest drop in weeks. Theresa May is said to have fought to revive a deal to break a deadlock in the EU negotiations. UK retail sales increased .6% YoY in November.  The composite and services PMI both missed expectations.


    EUR is lower after stalling around the mid-European session near the 1.1875 region.  The approval of a major tax reform plan by the US Senate, coupled with the ongoing upsurge in US Treasury yields continue to support demand for the greenback and has been one of the key factors weighing on the EUR.  Eurozone PMI data met estimates at 56.2 while October retail sales were weaker than expected at -1.1% m/m. 


    USD-CAD, which has been on a downward path since last Friday's release of forecast-busting GDP and employment data, edged out a six-week low of 1.2651. Policy makers have turned more cautious after the September hike, however, there’s speculation that they will signal a brighter outlook, spurring CAD strength into year-end.  WTI is lower as traders continue to unwind long positions which had been built up ahead of the OPEC meeting last week.


    AUD showing strength following an above-forecast retails sales report which was subsequently backed-up by a comparatively less-dovish statement from the RBA governor. AUD-USD carved out a three-week high of 0.7653. The Trump administration is debating how to put pressure on North Korea.  They are looking to sanction China, as Pyongyang’s top patron, but doesn’t want to alienate the best hope to curb North Korea’s nuclear program.

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Source: Bloomberg 2017

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About the Author

Ben Johnston is a foreign exchange advisor for Silicon Valley Bank’s global financial services group, based in Boston, MA. He specializes in developing niche-specific risk management and process optimization strategies for Silicon Valley Bank's Private Equity and Venture Capital clients, including exposure identification, risk management, policy development and tailored product strategy. He has over nine years of experience in the banking industry, including portfolio management roles at Sovereign Bank/Santander and Silicon Valley Bank.

He holds an undergraduate degree of Finance & International Economics from Bentley University.
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