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Daily
FX Update

Financial markets expect Fed to cut rates tomorrow and will scrutinize comments for future rate moves

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The FX markets are quiet with the US dollar giving back early morning gains. Most market practitioners are focused on tomorrow’s Federal Reserve rate announcement and Friday’s Non-Farm Payroll numbers for October. 

“In principle, I am against principles”

Tristan Tzara, Romanian poet
  • FX Rates
    October 29, 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
    Yesterday on Wall Street, equities reached new highs, fueled by optimism of a trade deal with China and expectations of an additional rate cut from the Federal Reserve at tomorrow’s meeting. Earnings season has been strong, but the dollar has been flat to slightly weak on safe-haven asset selling. House prices in the US came in slightly weaker than expected.
    GBP
    The pound rallied in volatile trading again this morning after the opposition party agreed to an early election. FX markets now expect a negotiated Brexit as the most likely scenario or perhaps a second referendum vote.
    EUR

    The euro is stuck in a tight 1.10-1.11 range vs. the US dollar while hitting record highs vs the Norwegian krone. 

    The EU granted a “flextension” for the UK to withdraw from the member bloc by Jan 31 2020, however, they are happy to bring the date forward if a deal is fully agreed in UK parliament.

    CAD

    The Canadian dollar continues to rally and has now hit a 3-month high relative to the US dollar, despite oil prices falling by over 1% this morning. Markets expect the Fed to cut rates and the Canadian central bank to leave rates unchanged tomorrow resulting in a 1.75% benchmark rate for both countries.

    ASIA/PACIFIC

    Inflation in Japan remained flat for October, with YoY CPI ex-fresh food increasing 0.5%, missing forecasts. The data is unlikely to alter the near term path of policy for the Bank of Japan who are expected to hold rates steady at Thursday’s meeting.

    The Australian dollar gained vs. most all currencies as risk-on sentiment led speculators to buy the A-dollar and sell safe-haven currencies like the US dollar and Swiss franc.

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/foreign-exchange

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About the Author

Peter Compton is a senior foreign exchange advisor for Silicon Valley Bank’s global financial services group, and has been with SVB since 2007. He helps clients design and implement hedging strategies for foreign currency exposures. Compton has over 20 years experience in global financial markets.

Before joining Silicon Valley Bank, Compton spent seven years working in the European equity markets. Based in Germany, he spent four years with HSBC and three years as Head of Equity Sales for ABN-AMRO in Frankfurt. Prior to his work overseas, Compton spent seven years with Bank of America in San Francisco as an equity and fixed income derivative specialist.

Compton holds a bachelor's degree in business and management from the University of Rhode Island and a Master's of Business Administration from San Francisco State University.
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