FX Update

The Pound Sinks on Brexit “Deadlock” while the Catalonia situation heats up. 

 |  October 12, 2017

USD weakens slightly after Federal Reserve minutes showed continued caution over the timing of more interest rate increases.  Tone has now shifted from hawkish to dovish.  G-10 currencies trading sideways as market participants are awaiting U.S. Inflation data.

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  • FX Rates
    October 12, 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

    Dollar Spot Index was hardly changed after falling 0.3% Wednesday.  Donald Trump is meeting this week with Stanford University economist John Taylor, who is on the shortlist of Fed Chair replacements.
    Oil halts three days of advances near $51 a barrel.  Gold heads for fifth day of gains, its longest winning streak since May, as USD holds losses after minutes of FOMC’s meeting showing rising concern about low inflation.  Treasuries gained overnight as a result of the dovish response from the Fed.



    The pound headed lower after EU’s chief Brexit negotiator, Michel Barnier, said that the UK and EU have reached “a state of deadlock” on the divorce bill.  GBP had rallied against the USD after FOMC meeting minutes, but was quickly muted by these stumbling negotiations with the EU, pulling it back below $1.32 against the greenback.  
    BOE’s latest prognosis on consumer credit showed that the UK’s banks are heeding governor Carney’s warning of “pockets of risk” and reining in unsecured lending. 


    EUR hit a day high of 1.1880 only to meet take-profit interest after London stepped in.  Market participants are now waiting for U.S. data to reevaluate positions.  ECB’s governing council agrees no rate hike until end of QE.  Eurozone Aug Industrial Production m/m: 1.4% vs. 0.6% est. 
    Catalonia looking for negotiations rather than immediate independence. Catalonia’s PM Rajoy starts process that could lead to suspending Catalan government.     


    The Canadian Dollar has bounced back from its 3-day low, sitting just below 1.25. The New Housing Price Index has seen a drop to .1% MoM, its lowest increase in 6 months.
    NAFTA talks are underway in Washington with Prime Minister Trudeau trying to convince Trump of free-trade benefits. These attempts don’t seem to be working, which can be seen from Trump’s current comments around the deal.


    Japanese markets benefit from cheap Yen and sentiment that Prime Minister Abe will stay in power. 
    The AUD has advanced against the USD overnight, ahead of Australian Economic releases next week (Employment Change, Unemployment Rate).  China has developed a payment system for CNY and Russian Ruble transactions to reduce risks and improve the efficiency of foreign transactions.  South Korea’s annual inflation has increased to the fastest in more than five years.

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Source: Bloomberg 2017

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