Dollar gains momentum ahead of this week's FOMC guidance
July 29, 2019
The Bloomberg Dollar Index touches its highest level since June 6. Safe haven currencies thrive with traders remaining cautious ahead of US-China trade talks Tuesday, a Fed rate decision Wednesday, and the US jobs report Friday. Brexit concerns drive the pound to a two-year low and the euro dips after ECB officials failed to deliver a rate cut last week.
Tuesday: Germany Consumer Confidence, US Consumer Confidence
Wednesday: Germany Retail, Eurozone Unemployment, US Fed Rate Decision
Thursday: BoE Rate Announcement, Australia PPI
Friday: US Unemployment Rate
July 29, 2019
EUR/USD 1.1124 GBP/USD 1.2262 USD/CAD 1.3151 AUD/USD 0.6909 USD/JPY 108.65 USD/CNH 6.8983 USD/ILS 3.5257 USD/MXN 19.0918 USD/CHF 0.9915 USD/INR 68.7325
US GDP growth numbers came in higher than expected on Friday, days before the FOMC meeting this week. This diminished hopes of a larger than expected 50 bps rate cut from the Federal Reserve. White House economic adviser Larry Kudlow said on Friday that the Trump administration had “ruled out” intervening to push rates lower.
The dollar posted gains on the back of better than expected economic data, with the dollar index reaching the strongest level in almost two months.GBP
Boris Johnson continues to face strong opposition from within his own party for his apparent willingness to take the UK out of Europe without a deal on October 31. The proposed Irish backstop is once again seen as a key sticking point. Last week, Scottish Conservative Party leader Ruth Davidson said she would not back Johnson's plans for a no-deal Brexit. Growing political uncertainties over the UK’s future have put pressure on sterling, sending GBP/USD to the lowest level in two years.EUR
The euro approaches its YTD low of 1.1102 in conjunction with overall dollar strength. ECB officials signaled last week that they are prepared to cut rates in September and adopt more easing measures to give a boost to the sagging eurozone economy.CADThe loonie is marginally stronger against the dollar this morning as markets position themselves ahead of Canada’s GDP numbers (by sector) Wednesday and June trade data due Friday. Traders will look for healthy growth in exports - a downside report will most likely push BoC officials to a near-term rate cut.ASIA/PACIFIC
Bank of Japan is starting its two-day policy meeting on Monday, where markets expect dovish signals from BoJ officials and no adjustments to major policies.
US-China trade talks will begin on Tuesday; the first in-person talks since the G20 truce in June.
For more analysis on FX markets or information regarding SVB's FX services:
Thank you for subscribing to SVB's Daily FX Update.
You’re almost done. Please check your email box and follow the instructions to confirm your subscription. If you did not receive an email please check your Spam or Bulk E-Mail folder just in case the confirmation email got delivered there instead of your inbox. If so, select the confirmation message and mark it Not Spam, which should allow future messages to get through. We also suggest you whitelist the svb.com domain.
Please note that we will continue to send you communications that we need to send you (for example, to keep you updated on operational changes to your account, a product or a service) or that we are required to send you by law.
This article is intended for U.S. audiences only.
©2019 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license.
The views expressed in this email are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.