US dollar hits two-year high
August 1, 2019
The Bloomberg Dollar Index advances gains for its 10th consecutive trading session. Yesterday’s FOMC guidance clearly distinguished its rate cut as not the start of a new monetary easing cycle. BoE officials hold rates and asset purchases at today’s policy meeting as Parliament grapples with rising Brexit concerns.
"Kindness is the language which the deaf can hear and the blind can see."Mark Twain
August 1, 2019
EUR/USD 1.1060 GBP/USD 1.2120 USD/CAD 1.3222 AUD/USD 0.6850 USD/JPY 108.32 USD/CNH 6.9085 USD/ILS 3.5100 USD/MXN 19.1680 USD/CHF 0.9946 USD/INR 69.0650
The Federal Reserve delivered a hawkish hold as it cut the federal funds rate by 25 basis points to a range between 2% - 2.25%. While the market fully expected a downward adjustment to rates, many were expecting Fed Chair Powell to hint at future easing. However, he labelled the cut “a mid-cycle adjustment to policy” intended to “insure against downside risks” and would not commit to a long series of cuts. President Trump was open in his criticism, writing on twitter “As usual, Powell let us down”.GBP
The pound fell below 1.21 to the dollar for the first time since January 2017 after BoE officials left rates unchanged and maintained asset purchases at current levels. On the Brexit front, Boris Johnson ramped up his Brexit “do or die” pledge as the government set aside another £2.1 billion pounds to prepare for a no-deal divorce from the EU.EURThe euro touched a new 27-month low on the back of the Fed’s less-dovish-than-expected guidance. Upward revisions to July eurozone PMI data did little to protect the common currency as traders price-in further policy easing from the ECB in September.CAD
The loonie neared six-week highs as the Fed refrained from signaling an easing cycle and commodity markets rest in risk-off mode. PMI data out of Canada for July beat previous month’s numbers, but had little to no effect on the currency.ASIA/PACIFIC
The Japanese yen reached a two month peak above 109 in reaction to the Fed’s first-in-a-decade rate cut. Risk-off sentiment trickles back into the market as the currency recovers earlier losses.
Manufacturing readings in China delivered an upward surprise with the Caixin PMI arriving at 49.9 against an expected 49.5.
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.