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FX Update

Safe-haven status and comparably higher short-term yields help US dollar

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Global investors remain very cautious selling risky assets and moving to relatively safe investments like US Treasury securities. The trade war between the US and China dug deeper as China threatens to restrict the export of so called rare earth materials to the US. The US imports 80% of such materials from China and uses them in cell phones, electric cars and many other technology gadgets.

“Life is a long lesson in humility.”

J.M. Barrie
  • FX Rates
    May 29, 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 US dollar is stronger today on global investors demand for the relative safety of US Treasuries. Mortgage applications for May showed a contraction of 3% confirming a slowing US housing market after yesterday’s weaker than expected home price data.

    The US Treasury has confirmed that no major trading partner currently meets the currency manipulator status. However, a number of countries, including China and Germany, remain on the watch list.

    GBP

    The British pound is lower today having now fallen 4% since May 3. FX traders are now eying the lows from December of 1.2516 in the face of political uncertainty and its knock-on effects to Brexit and the UK economy.

    In the Conservative leadership contest there are now eleven MPs in the race. Boris Johnston has been asked to appear in court to answer questions regarding misleading statements he made regarding UK spending on the European Union.

    EUR

    The euro weakened despite French consumer spending data coming in stronger than expected.   EU leaders gathered yesterday to start discussions on who will become the next EU President and leader of the European Central Bank. Reports emerged that there are key differences of opinion between Merkel and Macron.

    CAD

    The Canadian central bank meets later today and is expected to leave its benchmark rate at 1.75%. Inflation is subdued in Canada and housing prices in two key cities have been falling recently.

    Oil – after rallying for three days – again slid to its lowest price since mid-March. Traders are concerned a global economic slowdown will decrease demand for oil.

    ASIA/PACIFIC

    Chinese renminbi weakened for a third day in a row relative to the US dollar – mostly on trade concerns but also on concerns regarding the overall strength of the Chinese economy.  FX traders do not expect the renminbi to weaken much more until after the G-20 meeting in Japan on June 20.

    Australian dollar weakened somewhat as traders await Reserve Bank of Australia meeting next month to see if monetary authorities cut rates.

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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