The euro holds gains after signing of first ever stimulus package while dollar continues to slide against most currencies

The dollar continues its downward trajectory as financial markets see more promising economic activity in Europe and elsewhere. The British pound shoots up over 1.27 on hope of a vaccine and positive sentiment on Brexit talks. Commodity currencies like the Canadian and Australian dollar both see large demand as the price of oil and other commodities rally on expectations of a stronger economy in the second half of the year.

"The way to get started is to quit talking and begin doing".
Walt Disney
  • FX Rates
    July 21, 2020

    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 US dollar continues to sink relative to a basket of currencies and is now down 2% since the start of the month. With the Fed having cut interest rates to zero, US Treasuries are not as attractive relative to other countries. Also, the outlook for the US economy suddenly looks less certain with Covid less contained relative to other developed countries and the US election looming in under 4 months.

    GBP

    The pound shot over 1.27 again after leaders on the Continent agreed on a stimulus package. Also, the sentiment around Brexit negotiations is hopeful of a solution before year end. 

    Households in Britain are suffering the biggest shock to income since the 1970s, according to reports from think tank, the Resolution Foundation. The report said real wages have dropped 4.5% as a result of the pandemic, despite wage support programs.

    EUR

    The euro briefly traded over 1.15 after the EUR750B ($860B) stimulus package was agreed upon. Some economists see Europe outperforming the US over the next 6 months due to central bank interest rates being relatively close and Europe generally doing a better job handling coronavirus. 

    CAD

    The Canadian dollar strengthened on the back of a significant increase in the price of West Texas Intermediate. Oil has been stuck at roughly $40/bbl since doubling from end of April. With the Europeans passing a large stimulus package the outlook for oil demand has brightened significantly.

    ASIA/PACIFIC

    The Australian dollar is trading at its strongest level since April 2019 on overall US dollar weakness and strong commodity prices.

Contact Us

For more analysis on FX markets or information regarding SVB's FX services:

Contact your respective SVB FX Advisor or the SVB FX Advisory Team at fxadvisors@svb.com.
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory

Subscribe to receive the Daily FX Update in your inbox.

By providing your email address and clicking on the Subscribe button below, you consent to receive emails from Silicon Valley Bank for your chosen categories. You also consent to the terms of our Privacy Notice. If you have privacy questions, you may contact us at privacy@svb.com. You can withdraw your consent at any time.

Peter Compton
WRITTEN BY
Peter Compton

Insights from SVB Industry Experts

 
SVB experts provide our customers with industry insights, proprietary research and insightful content. Check out these related articles that may be of interest to you.

FX Daily Update: US dollar holds at two-year lows

 

FX Daily Update: US dollar down against peers as debate on US fiscal stimulus continues

 

Commodity-linked currencies decline as USD gains

 

Daily FX Update: US dollar on track for largest 2-day gain in 7 weeks

 

Daily FX Update: Dollar ends lower for sixth straight week

 

Daily FX Update: Dollar steady after GDP slump