Daily
FX Update

US-China trade talks weigh on financial markets, lift dollar

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US-China trade talks resume on Thursday, but markets are nervous. The current “risk-off” mode is pushing global equity markets lower, bond yields lower, and the dollar higher. A statement this morning from the Iranian government threatened the 2015 nuclear deal.

“Trust the wait. Embrace the uncertainty. When nothing is certain, anything is possible.”
Mandy Hale, The Single Woman
  • FX Rates
    May 8, 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 is benefiting from its role as a safe haven asset, as trading moves to “risk-off” mode. Markets are also unnerved by Iran’s statement today that it will scale back its pledges under the 2015 nuclear deal and may resume uranium enrichment unless the remaining signatories (Germany, Britain, France, China and Russia) ensure within 60 days that Iran may sell its oil overseas. The US sent an aircraft carrier to the Persian Gulf earlier in the week.

    GBP

    The pound fell as expectations for a cross-party Brexit breakthrough diminished. PM May’s goal of reaching an agreement with the Labour Party declined after another day of inconclusive talks. The pound is trading near $1.30 after peaking at $1.3170 earlier in the week.

    EUR

    It’s been a relatively uneventful week for the euro; it’s steady around the $1.12 level. European stocks dropped following steep declines in Asian markets amid trade tensions. German Industrial Production surprised on the upside, +0.5% actual vs. -0.5% expected.

    CAD

    The Canadian dollar moved little overnight, remaining well under the key 1.35 level, and despite lower oil prices. Traders await Canada’s April Housing Starts, which are expected to fall by 6.8%.

    ASIA/PACIFIC

    A sell-off in Asian equities put pressure on the Chinese yuan. China’s Shanghai Composite dropped 1.1% after an unexpected fall in exports and gain in imports, showing that US tariff pressures may be having a negative impact on trade.

    Dollar-yen dropped below 110 for the first time in months, due to the yen’s role as a safe haven asset for global investors.

    The New Zealand dollar fell after the Reserve Bank unexpectedly cut interest rates by 50 bps. The RBNZ expressed surprise by the negative impact on NZ by the global economic slowdown.

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Contact your respective SVB FX Advisor or the SVB FX Advisory Team at fxadvisors@svb.com.
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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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