Trade war continues to heat up – this time hitting the dollar and helping the euro
May 22, 2019
The euro and the yen were two of the only currencies gaining on the US dollar. Trump threatens more Chinese tech companies. The British pound gets hit by both negative Brexit news and weaker economic data. Oil weakens but the Canadian dollar remains strong today on better than expected retain data.
“You cannot reason with a tiger when your head is in its mouth”
May 22, 2019
EUR/USD 1.1159 GBP/USD 1.2629 USD/CAD 1.3393 AUD/USD 0.6880 USD/JPY 110.35 USD/CNH 6.9343 USD/ILS 3.6120 USD/MXN 18.9768 USD/CHF 1.0085 USD/INR 69.6687
The trade war between the US and China continues to dominate financial market headlines as the US weighs stronger restrictions on Chinese technology companies. There seems to be little chance of compromise from the US as Chinese President Xi Jinping called on citizens to join a “new long march”, a phrase he’s used previously to characterize achieving progress despite hardship. Trade talks are paused with President Trump accusing China of backing out of a deal.GBP
The British pound sank after members of UK parliament demanded Prime Minister Theresa May step down within days. Contributing to the weakness, CPI and PPI data for April came in weaker than expected.EUR
The euro is stronger this morning as traders sell the British pound in favor of the euro. Brexit news causes some selling of the pound relative to the euro.
Italian deputy PM Matteo Salvini has once again criticized the EU, stating that some European Union rules and limits have to be changed to allow Italy to introduce a “flat tax” at 15% to boost jobs.CAD
The Canadian dollar is stronger this morning after retail sales figures came in better than expected, providing evidence that Canada’s economy is resilient.
The oil price sank on concerns that trade tensions, primarily between the US and China, will impact the global economy, resulting in less demand for oil.ASIA/PACIFIC
The Chinese renminbi was stronger overnight after 16 straight days of losses. Chinese authorities set the daily peg stronger in what is viewed as a stabilizing effect.
The Japanese yen strengthened after Trump threatened to sanction more Chinese tech companies and US Treasury Secretary Steven Mnuchin said he has no plans to travel to China.
For more analysis on FX markets or information regarding SVB's FX services:
Subscribe to receive the Daily FX Update in your inbox.
Thank you for subscribing to SVB's Daily FX Update.
You’re almost done. Please check your email box and follow the instructions to confirm your subscription. If you did not receive an email please check your Spam or Bulk E-Mail folder just in case the confirmation email got delivered there instead of your inbox. If so, select the confirmation message and mark it Not Spam, which should allow future messages to get through. We also suggest you whitelist the svb.com domain.
Please note that we will continue to send you communications that we need to send you (for example, to keep you updated on operational changes to your account, a product or a service) or that we are required to send you by law.
This article is intended for U.S. audiences only.
©2018 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license.
The views expressed in this email are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.