FX Update

The dollar held onto gains after meeting PPI estimates; Chinese policy and currency fixing keeps the yuan stable despite recent fluctuations


US PPI data met expectations this morning, allowing the US dollar to hold onto gains. Dollar strength keeps the euro tracking sideways. Strong data out of the UK lifted the pound, but ever present Brexit uncertainty caps the currency’s strength. Yuan fixing and policy announcements out of China solidify China’s intent to keep the yuan stable amid questions if a devalued yuan could boost Chinese economy. 

“Instead of worrying about what you cannot control, shift your energy to what you can create.” 
Roy T. Bennett
  • FX Rates
    June 11, 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 maintained gains after US May producer prices (PPI) met expectations. US PPI rose 0.1% MoM and 1.8% YoY vs expectations of 0.1% MoM and 1.9%YoY. PPI Core rose 0.2% MoM and 2.3% YoY hitting expectations exactly. The latest trade war comments from the White House assure that if Chinese President Xi Jinping doesn’t attend the G-20 meeting later this month, additional duties will be levied on Chinese goods. Trump told CNBC “The China deal is going to work out. You know why? Because of tariffs”.
    The pound was initially helped this morning by UK employment data that showed an uptick to 3.1% for wage growth and ex-bonus measure of 3.4% for the first 3 months of the year. Data, paired with hawkish comments from BoE, pushed the pound higher. Brexit uncertainty and dollar strength keep the gains capped.

    Disciplinary procedures over Italy’s too high debt levels begin today. Deputy PM Matteo Salvini insisted that he doesn’t want to “pick up a fight with Europe” and that a compromise can be found. EU reps are to meet with finance minister Giovanni Tria to set up an acceptable shared budget package. The euro is slightly weaker following strong US data, but mostly tracking sideways within range.

    The loonie was helped by slightly higher oil prices but maintains directionless within a range. US CPI numbers tomorrow may provide direction. 

    In a clear message around China's intent to keep the yuan stable, the central bank fixed the yuan more than expected on Tuesday and announced plans to sell bills in Hong Kong at the end of the month. Beijing announced another stimulus program to provide more spending for infrastructure and public projects.

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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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