The US dollar is up this morning as large volumes of equity option expirations are expected to add to volatility
The dollar adds to gains as financial markets gird for potential volatility. Today’s option expiration and next week’s FOMC meeting are in focus. The Fed may provide details on reducing their bond purchases (tapering). However, the US national debt limit needs to be raised before the US Treasury runs out of money leading some market watchers to believe the Fed will hold off on committing to bond purchase reductions until their November 3 meeting.
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September 17, 2021
EUR/USD 1.1752 GBP/USD 1.3781 USD/CAD 1.2688 AUD/USD 0.7292 USD/JPY 109.99 USD/CNH 6.4616 USD/ILS 3.2061 USD/MXN 19.9418 USD/CHF 0.9294 USD/INR 73.4837 USD/BRL 5.3290 USD/SGD 1.3471 USD/DKK 6.3262 USD/SEK 8.6513 USD/NOK 8.6353
Today is “triple-witching” Friday when a large number of equity options expire. Given the growth in the use of equity options over the past few years the financial markets anticipate higher levels of volatility on “triple-witching” days. The dollar is strengthening this morning as investors position for potential risk.
The University of Michigan’s Consumer Sentiment index for September is due out later this morning.GBP
The British pound is stronger despite UK retail sales for August falling unexpectedly for a 4th month, the worst run of declines since 1996 as the resurgence of the virus weighs on consumer sentiment. The volume of goods sold online and in stores fell 0.9% compared to a consensus of +0.5%.EUR
European Central Bank governing member Gabriel Makhlouf indicated that inflation may be higher than expected in the future causing European government bond yields to move higher. The initial knock-on effect was a stronger euro in overnight and early morning US trading. The euro has since reversed and is weaker as we print.CAD
The Canadian dollar regained some of yesterday’s losses relative to USD. The price of oil, which surged higher earlier this week, has remained elevated on investors' belief that supply will remain constrained as the global economy recovers from the pandemic.ASIA/PACIFIC
The Chinese renminbi is flat relative to the US dollar after authorities added $14B worth of renminbi to the banking system to assure there is significant liquidity for quarter end.
The Australian dollar rebounded after yesterday’s losses. FX traders consider the Australian economy at risk due to a slowing Chinese economy. Australia exports significant amounts of goods to China, especially iron ore -- the price of which has been falling of late.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory
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