The USD gains and stocks trade cautiously as US CPI data is in line with expectations but retraces on Tillerson ousting
John Schweizer |
March 13, 2018
The greenback kicked off on a positive note this morning, rallying across the board after US inflation data was released meeting market expectations. The dollar also garnered support from yesterday US Treasury actions which saw solid foreign buying interest and rates tick marginally higher. The dollar gave back gains after President Trump removed Rex Tillerson as Secretary of State. Trump and Tillerson had clashed often on foreign policy and the change comes as talks with N. Korea advance.
“Courage is grace under pressure.”
March 13, 2018
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.
Yesterday’s US Treasury auction delivered no surprises. The release of US CPI for February came in at expectations (2.2% YoY, 0.2% MoM) and slightly stronger than the prior reading. The data should not adversely affect next weeks Fed policy meeting.
Larry Kudlow of CNBC is reported to be the favorite to replace Gary Cohn as Trump’s chief economic adviser. An announcement is expected in the next few days. While this morning Trump replaced Tillerson with CIA Director Pompeo as Secretary of State.
Chancellor Philip Hammond presented the spring financial statement and updated economic forecasts from the Office for Budget Responsibility today. His statement suggested wage growth is expected to improve which may support rate hikes and the pound. However, the economic turnaround has yet to materialize which will likely restrain the BoE near term.
A quiet data day from Euroland has the single currency trading in a penny range, roughly 1.23 to 1.24. The euro dipped initially in reaction to the US inflation data meeting market expectations but has recovered on the news of further political shake up in the Trump Cabinet as Secretary of State Tillerson is replaced.
USD:CAD ticks higher this morning supported by US inflation data. There are no additional releases of Canadian data today. Bank of Canada Governor Poloz will speak at an event in Kingston, Ontario later today. The market expects him to comment on the strong Canadian jobs data reported last week and if the pace of the Canadian economy will keep up with its southern neighbor. Growth will dictate if the BoC will hike rates in line with the FED or if economic headwinds temper further hikes.
Equity markets trade mixed in the region as stocks struggle for direction. China’s Shanghai Composite and Australia’s ASX 200 trade in the red while Japan’s Nikkei 225 posts a gain, boosted by a weaker yen and ahead of the Bank of Japan minutes.
Producer prices in Japan rose 2.5% YoY in February, in line with market expectations.
The New Zealand dollar was the only major to gain against the greenback.
For more analysis on FX markets or information regarding SVB's FX services:
Subscribe to receive the Daily FX Update in your inbox.
|Source: Bloomberg 2017|
© 2017 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
The views expressed in this article are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.
About the Author
John Schweizer is a product and foreign exchange advisor with Silicon Valley Bank’s Global Financial Services Group, based in Boston, MA. He works with SVB clients who conduct business globally and advises on the products, strategies and solutions used to manage international transactions and cash flows and mitigate the risk associated with currency fluctuations.
John has over 25 years of financial services experience in global treasury and foreign exchange, encompassing trading, sales and marketing, and product advisory. Prior to joining Silicon Valley Bank, he worked at several financial institutions including BankBoston, TD Bank and Fidelity Investments.
John holds a B.A. in International Affairs from The George Washington University and a M.S. in Multinational Commerce from Boston University.
Now Let's Get Started
See how Silicon Valley Bank makes next happen now for entrepreneurs like you.
Connect With Us