FX Update

US-China trade dispute drives dollar, global equities and US 10-year note lower


Friday’s slap of tariffs on Chinese imports lead to retaliation from China as additional tariffs were imposed on $60B worth of US goods. GBP and EUR movements are driven mostly by news surrounding US and China. The pound gained some traction above the 1.30 handle and the euro also pushed higher on dollar weakness.

Monday: JN BoP Current Account Balance

Tuesday: German ZEW Survey Expectations, UK Jobless claims, German CPI

Wednesday: Canada CPI, US Retail Sales

Thursday: US Jobless Claims, US Housing Starts

Friday: U. of Mich. Sentiment

  • FX Rates
    May 13, 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 greenback is flirting with new lows near the 97.00 handle and the 10-year note dropped to 2.41% after China’s announcement of retaliatory tariffs on $60B of US goods. This follows the additional tariffs in US imports on Chinese goods that were imposed on Friday. In the heat of the trade war, market chatter pointed to the possibility of China dumping US Treasuries.

    Speeches are due today by the Boston Fed, FOMC’s Clarida and the Atlanta Fed.
    The pound regained traction to climb above 1.30 after dropping mid-day on Friday fueled by a slightly weaker tone surrounding the USD.  PM May is set to reopen Brexit talks with EU officials about a future customs deal to reignite stalled negotiations.

    The euro pushed higher after China said it would impose tariffs on 5,000 US products responding to the US’s threat to impose additional tariffs unless China makes new concessions. Political headwinds are set to become an emerging factor due to the upcoming EU parliamentary elections scheduled for the end of the month.

    The Canadian dollar fell as demand for haven currencies rose after China said it would raise tariffs on US goods as trade tensions escalated through the weekend. Higher oil prices failed to assist in strengthening the currency.
    China plans to raise tariffs on $60B worth of US goods after trade tensions escalated over the weekend. On Friday, the US imposed a 25% tariff on more than $200B of Chinese goods – up from 10% previously.  The renminbi suffered the largest 1-day drop since August and global equities tumbled.
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About the Author

Kathryn Garvey is a foreign exchange Associate for Silicon Valley Bank’s global financial services group and has been with SVB since July of 2018. Prior to SVB Kathryn completed co-op internships at Innosight, Market Metrics, and The TJX Companies.

Garvey graduated from Northeastern University in 2018 with a bachelor’s degree in finance, and marketing with elective coursework in entrepreneurship and innovation from Northeastern University.

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