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Daily
FX Update

Overnight setting of the renminbi's value calmed financial markets

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The dollar is stable as markets await the next tweet. Safe-haven Japanese yen and Swiss franc gave back some of their recent gains. The Australian dollar collapsed to its weakest level in 10 years yesterday as the Reserve Bank of Australia holds rates at 1% and signals low rates are here to stay. Hopes of avoiding a hard Brexit buoyed the pound.

“Just because you do not take an interest in politics doesn't mean politics won't take an interest in you.”
Pericles
  • FX Rates
    August 6, 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

    Non-manufacturing PMI numbers came-in below expectations yesterday. However, the main focus for investors was escalating US-China tensions, as the US accused China of currency manipulation after the renminbi breached Rmb7 to the dollar.

    Labeling China as a currency manipulator provides President Trump cover to direct the US Treasury to buy renminbi and sell dollars to weaken the greenback. This has rarely occurred but is supported by Director of Trade and Manufacturing Policy, Peter Navarro and Trump.

    GBP

    EU officials believe there is “no basis” for further withdrawal agreement negotiations as UK demands. The opposition Labor Party says they will call for a no-confidence vote in parliament when the group reconvenes after summer break. The financial markets see this as a possible way to prevent Boris Johnson from taking Britain out of the EU without a deal.

    Positive news came out on the data front, as UK Composite PMI and Services PMI came-in higher than expected.

    EUR

    The euro gave back some of yesterday’s gains after the Chinese fixed the yuan at stronger levels and hopes of a Brexit deal surfaced. German factory orders for June surprised to the upside at +2.5% erasing much of the loss from the prior month. Economists still believe Germany may be headed for a recession.

    CAD

    The Canadian dollar is weaker today as the price of oil remains under pressure. The C-dollar broke a long-term weakening trend in June but has been unable to gain strength since.

    ASIA/PACIFIC

    The People’s Bank of China set the daily currency fixing stronger than expected, helping the tumbling renminbi stabilize.

    Strong positive economic data helped the New Zealand dollar continue its recent rally.

    Possible economic weakness in China, due to the trade war, drove the Australian dollar to its weakest level in 10 years relative to the US dollar.

Contact Us

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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About the Author

Peter Compton is a senior foreign exchange advisor for Silicon Valley Bank’s global financial services group, and has been with SVB since 2007. He helps clients design and implement hedging strategies for foreign currency exposures. Compton has over 20 years experience in global financial markets.

Before joining Silicon Valley Bank, Compton spent seven years working in the European equity markets. Based in Germany, he spent four years with HSBC and three years as Head of Equity Sales for ABN-AMRO in Frankfurt. Prior to his work overseas, Compton spent seven years with Bank of America in San Francisco as an equity and fixed income derivative specialist.

Compton holds a bachelor's degree in business and management from the University of Rhode Island and a Master's of Business Administration from San Francisco State University.
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