Daily
FX Update

The dollar gains as US-China trade talks start today, increased pressure on Asian equities and currencies

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The market continued in “risk-off” mode as US-China trade talks start today. Investors are also concerned with intensifying geopolitical risks in Iran and North Korea, who launched more missiles overnight. Global equities dropped and US equity futures are poised to open lower. The dollar, yen, gold and Treasuries all gained as investors moved into safe havens, while the Chinese yuan fell to its weakest level since January.

“Conflict is good in a negotiation process…it’s the clash of two ideas, which then, all being well, produces a third idea.”
Luke Roberts
  • FX Rates
    May 9, 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 made strong gains against Asian currencies as US-China trade talks commence. Yesterday, President Trump claimed that China “broke the deal” that had already been agreed upon, and therefore is justified in increasing tariffs tomorrow on $200 billion of Chinese goods. China said that will retaliate in kind.

    GBP

    The UK pound continues to trade around the $1.30 level, as investors attention is focused elsewhere. Cross-party Brexit talks continue in earnest.

    EUR
    The euro is little changed from yesterday, as traders await news from the trade talks. There are no key German or other Eurozone country events or releases today.
    CAD

    Lower oil prices and trade tensions are putting pressure on the Canadian dollar. USDCAD is edging higher, approaching key resistance at 1.35. Canadian data released today will include April’s International Merchandise Trade, New Housing Price, and Bloomberg’s Canada Economic Survey for May.

    ASIA/PACIFIC

    The Chinese yuan traded to its weakest level since January. In addition to the trade talks, investors had to deal with release of China’s credit growth data, which was unexpectedly weak.

    The Japanese yen made further gains overnight, reaching a three-month high, as investors move into safe haven currencies. Trade tensions and yesterday’s North Korea missile launches fueled increased risk aversion.

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About the Author

Scott Petruska is Chief Currency Strategist and senior advisor for Silicon Valley Bank’s global financial services group, and is based in Boston, MA. He advises clients on currency and interest rate hedging strategies, and helps them with other aspects of global banking. He regularly writes blogs on topics covering the global financial markets, conducts client seminars and webinars, and speaks at regional financial conferences.

Petruska has more than 30 years experience in the currency and interest rate markets, and has lived and worked in Boston, Chicago, New York City, Singapore and Tokyo. Prior to joining SVB in 2009, he worked at several large international financial institutions, including National Westminster Bank, Irving Trust, Bank of New York, State Street Bank and Commerce Bank. He has been an institutional trader, product developer, analyst, salesperson and advisor.

Petruska has been awarded several professional designations, including the CFA (Chartered Financial Analyst), FRM (Financial Risk Manager) and CMT (Certified Market Technician). He earned his undergraduate degree in Finance & Banking from the University of Wisconsin.

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