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The dollar is higher following attacks by Iran on bases in Iraq; President Trump to give an update this morning

Overnight attacks on bases in Iraq had an immediate impact on the markets driving gold and oil higher and equities lower. Diffusing comments from the White House allowed the markets to give back gains and losses. The net result drove the dollar higher along with safe haven assets. In euroland, uncertainty regarding a post-Brexit trade deal added downside pressure to the euro and the pound.

“Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen.” 
Winston Churchill
  • FX Rates
    January 8, 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 greenback gained versus G-10 peers with the exception of the krona as President Trump's tweets diffused concerns about the Iranian strikes on military bases in Iraq. He is due to address the nation this morning. In the wake of the strike, gold and oil rose and equities dropped. The commodities have since given up gains and futures have recouped initial losses.

    The dollar was also helped by strong economic reports. The trade deficit fell 8.2% in November to the lowest level in three years driven by lower imports from China and an increase in oil exports. ADP reports show the private sector added 202K jobs in December versus 160K expected.

    GBP

    Cable dropped versus the dollar due to an increase in demand for the greenback on the trail of geopolitical tensions. PM Johnson told EU Commission President Ursula von der Leyen the British government is only interested in negotiating a free trade agreement for a post-Brexit trade deal and would like to done by the end of the year.

    EUR

    The euro fell to a two-week low versus the dollar weighed down by weak data and renewed Brexit concerns regarding both sides agreeing on all aspects of a deal. Factory orders in Germany showed a 6.5% decrease YoY – much worse than expected (-4.7%).

    CAD

    The loonie followed crude oil prices higher versus the dollar and then gave back gains as WTI prices reversed their sharp increase. The currency is lower versus the greenback amid falling oil prices and an increase in US dollar demand.  

    ASIA/PACIFIC

    The yen surged in early trading in a dash for safe-haven assets following the missile strikes before the pair rebounded to the mid-108 levels leaving the cross net unchanged.

    The Australian dollar lost 87 points versus the greenback yesterday and the pair is expected to continue to trade lower driven by bearish sentiment.

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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

Kathryn Garvey is a foreign exchange Associate for Silicon Valley Bank’s global financial services group and has been with SVB since July of 2018. Prior to SVB Kathryn completed co-op internships at Innosight, Market Metrics, and The TJX Companies.

Garvey graduated from Northeastern University in 2018 with a bachelor’s degree in finance, and marketing with elective coursework in entrepreneurship and innovation from Northeastern University.

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