FX Update

USD strengthens on employment change numbers, turmoil surrounding May and Brexit, and speculation of growth in Canada.

 |  December 06, 2017

As ADP employment numbers came out right at the survey number, the dollar has strengthened overnight against its major counterparts. Across the pond there is rumored dissention in May’s party surrounding Brexit terms with talks to pick up at week’s end. The CAD is rising before the BoC’s decision as Australian Dollar tumbles amidst bad GDP data.
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  • FX Rates
    December 06, 2017

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  • USD

    The dollar is gaining against other G10 currencies this morning.  Employment change came out right at the survey number of 190k, while unit labor costs decreased along with productivity. GOP conservatives are becoming more worried about federal spending, two weeks after backing a tax-cut legislation that would raise the deficit by $1 trillion over the next decade. House leaders are also looking to extend the government shutdown deadline.


    The pound has retreated slightly against the dollar, with manufacturing and construction output numbers set to release on Friday.  Top cabinet members within Teresa May’s party are rumored to support keeping UK regulations aligned with the European Union.  This would help the Northern Ireland border issue, but doesn’t sit well with Brexit supporters. Brexit negotiations are set to pick back up at the end of this week.


    The Euro is trading down almost .2% this morning. Factory order numbers were released this morning for the Eurozone, increasing MoM and YoY. Later today we will see the release of Retail PMI numbers for key countries in November.


    CAD rises before BoC rate decision with traders speculating that policy makers will be slightly more optimistic about growth forecasts, raising the prospect of rate hikes in early 2018.  Expectation is that BoC will keep rates steady at 1% while maintaining a cautious approach to rate hikes even as the loonie and yields rise after Friday’s stronger-than-expected employment data.  On the economic front Canadian Labor Productivity (Q3) fell short of estimates (-0.6% vs. -0.1%).

    Most majors are ceding ground to the yen in early trading as a drop in global equities is fueling risk aversion.
    Australian Dollar tumbles broadly today as weighed down by disappointing GDP data overnight. Q3 GDP rose 0.6% QoQ and 2.8% YoY, below expectations of 0.7% and 3.0%, respectively. Weak household consumption is seen as the most worrying part of the details. Consumer spending grew just 0.1% QoQ and was at the lowest rate in more than a decade since 2005. 
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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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