FX Update

US dollar strengthens and global equities rise as trade tensions cool


Stocks globally recovered helped by a slightly calmer stance on the trade front. Brexit is still in focus for the UK with a rumored fourth agreement in the works. This morning’s data is impacting the US dollar. April Retail Sales fell to -0.2% m/m from 1.7% in March and Industrial Production fell to -0.5% from 0.2%.

“It is not the answer that enlightens, but the question”
Eugène Ionesco
  • FX Rates
    May 15, 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 continues to rise and stocks recovered yesterday as the initial heat surrounding trade with China subsided. Kansas City Fed Chair, Ester George, said this was not the right time for the Central Bank to cut interest rates and warned such a move could potentially cause an economic downturn. She concluded by saying there was “little reason to be concerned” because of the low inflation as the labor market continues to show strength.                                                                                                        


    It is rumored that PM Theresa May will tell opposition leader Jeremy Corbyn she plans to submit the Brexit withdrawal agreement to parliament during the week of June the 3rd. May wants to have the agreement in place before the end of the summer. This will be the fourth attempt to put an agreement in place. The pound held above the 1.2900 support yesterday helped by the positive employment data but it broke down through 1.2900 this morning on dollar strength.


    The Italian Deputy Prime Minister said he is open to breaking the EU fiscal rules if it would help create more jobs. Italian bond yields jumped higher after the comments. On the data front, German Q1 preliminary GDP came in as forecast at +0.4% a rise from 0.0% in Q4. French CPI rose to 1.3% from 1.2% y/y.


    The Canadian dollar weakened and then recovered. WTI oil prices fell ¾ of a cent to US $61.00, CPI rose to 2.0% y/y from 1.9% in March.  


    Far East stocks rose led by Chinese shares after the Shanghai Composite rose 1.8%. The yen and the Indian rupee both strengthened. Chinese Retail Sales came in below expectations and Industrial Production was also soft. Japanese Construction Orders jumped higher and Machine Tool Orders remain soft.

    The Australian dollar strengthening against the US dollar continued.

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About the Author

Laurence Hayward is the Senior Advisor for International Markets and Risk for Silicon Valley Bank in its Central Region. He is responsible for helping clients mitigate foreign exchange risk, including trade finance and international cash management.

Hayward has over 40 years in the foreign exchange and interest rate markets, with experience as a banker, broker, trader and marketer / advisor. He has worked in London, Abu Dhabi, Dubai, Singapore, Hong Kong, New York, Houston, Dallas, Santa Clara and Denver for Barclays International, First National Bank of Boston, Tullett and Tokyo Forex International, Gulf International Bank, NationsBank, Bank One, Cambridge Mercantile Corp. and Silicon Valley Bank. He has made presentations to the national AFP, the New Orleans AFP, the Houston TMA. Fort Worth Chamber of Commerce, the University of Colorado at Boulder, the KPMG Global Enterprise Institute in Denver, and many bank presentations on the subjects of foreign exchange, international risk, FASB accounting rules and quant analysis. He has also been published in the Wall Street Journal, the New York Times, and many periodicals.
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