Daily
FX Update

Dollar edges higher, UK pound lower, equity rally holds, and bond yields decline

In relatively quiet trading overnight, the dollar edged higher versus major currencies. Equity markets are holding their recent rallies, and bond yields declined slightly. The UK pound traded lower as Brexit uncertainties grow, the cliff approaches and the clock ticks.

“There was nowhere to go but everywhere, so just keep on rolling under the stars.”

Jack Kerouac, Beat Generation poet, On the Road
  • FX Rates
    April 2, 2019

    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 edged higher against most currencies overnight. Aside from those for the GBP/USD, implied volatilities in the G10 currency pairs have fallen to new lows, which is fueling demand for the dollar in “carry trades”.

    GBP

    The UK pound is weak, as the UK Parliament rejected all the Plan B options presented to it on Monday. A cross-party band of MPs has put forward a bill to prevent a “no-deal” Brexit from becoming law. The bill would require PM May to ask the EU for an extension beyond the current April 12 exit date. It will be debated tomorrow.

    EUR

    The euro dropped after EU chief negotiator Michel Barnier said a no-deal Brexit is now more likely than ever before, but can still be avoided. He said a long extension past the April 12 deadline will have “significant risks for the EU” and “strong justification would be needed”.

    CAD

    The Canadian dollar gave back some of yesterday’s big gains, witnessed after Canada’s surprise GDP growth in January. In a speech on Monday BoC Governor Stephen Poloz expressed confidence that Canada will emerge further from its soft patch. There are no major economic releases in Canada today.

    ASIA/PACIFIC

    The Japanese yen is trading in a narrow range above 111. Higher UST bond yields seen yesterday pulled the USD/JPY over that key 111 level, and which will now provide good support going forward.

    The Chinese yuan is little changed overnight. The PBOC has purposely held it steady as the US-China trade talks intensify. Traders are watching the USD/CNY closely for any signs of China’s reaction to the US trade demands.

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For more analysis on FX markets or information regarding SVB's FX services:

Contact your respective SVB FX Advisor or the SVB FX Advisory Team at fxadvisors@svb.com.
See all of SVB's latest FX information and commentary at www.svb.com/foreign-exchange

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