FX Update

FX markets assuming Fed rate cut now turn to US-China trade talks and Brexit for direction

" | 

After Fed Chair Powell implied a rate cut at July month-end, the US dollar has been steadily weakening. The Fed largely ignored the better than expected US jobs data for June and will remain on a rate-cut course absent any extraneous shock. 

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”
Mark Twain
  • FX Rates
    July 12, 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 US dollar is softer continuing this week’s trend mostly stemming from global FX traders digesting recent cautious comments from Fed Chair Powell. Powell stated at his congressional testimony that the uncertainties in the US economy “have increased in recent months” – thereby leading the markets to anticipate a rate cut at the July 31 FOMC meeting. A release this morning of higher than expected PPI data for June is not likely to sway the Fed enough to avoid the strongly telegraphed rate cut.


    The pound continued gains vs. the US dollar for a third day mostly on overall dollar weakness. Weaker UK economic data this past week along with no-deal Brexit scenarios gaining probability are largely priced into the current FX rate. 


    The euro weakened overnight despite Eurozone Industrial Production for June beating estimates. ECB’s last governing council meeting confirmed investors’ expectations around monetary policy - the minutes showed policymakers agreed that the ECB should be “ready and prepared” to restart monetary stimulus measures.


    The Canadian dollar continues to trade at its strongest levels of 2019 vs. the US dollar. Traders see the interest rate differentials (US 2.50% and CAD 1.75%) closing while oil prices stabilize. 


    The Chinese renminbi weakened overnight as traders position in front of Sunday’s Q2 GDP release where a reading of 6.2% is expected.  China trade data for June showed a drop in imports thereby raising the trade surplus.

    The Australian dollar strengthened against the greenback continuing a trend of higher commodity prices supporting commodity exporting countries.

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
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.
Upbeat US labor data leading stocks higher, dollar softer
Dollar steady, markets consolidating
Dollar gains on profit-taking of risk assets
China rally fuels global risk-on sentiment, dollar lower
Dollar ends week on back foot
Dollar slides as jobs report surprises