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Dollar lower as China tariffs set to remain

Amid excitement over today’s signing of the ‘phase one’ China deal, traders learned that US tariffs on most imports from China will remain until after November’s presidential election. Germany’s economy is growing at its slowest level since 2013. A risk-off mood is leading to lower equity prices worldwide and a weaker dollar.

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  • FX Rates
    January 15, 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

    A risk-off sentiment is leading to a weaker dollar across the board. Traders are looking past today’s signing of ‘phase one’ and seeing major challenges lingering with China. Mixed corporate earnings are pushing US equity markets lower.

    GBP

    The UK pound is little changed as traders digest weak UK inflation data. UK CPI dropped to 1.3% from 1.5%, increasing odds for a BOE rate cut at month-end. Friday’s Retail Sales and next week’s labor data should provide more clues.

    EUR

    The euro reached one-week highs, despite weak eurozone data: November’s eurozone industrial production increased by a less-than-expected 0.2%, and Germany’s economy grew by only 0.6% in 2019, its weakest since 2013.

    CAD

    The Canadian dollar changed little overnight with traders focused on the US-China trade deal and after mixed economic news released this morning -- Canadian Home Prices showed an increase of 0.8% and New Listings declined by 1.8% m/o/m in December.

    ASIA/PACIFIC

    The USD/CNY currency pair continues to trade under 6.90. Traders are digesting news that US tariffs will remain in place and that China will be penalized should they fail to deliver on promises related to currency manipulation, intellectual property and their trade surplus with the US. On top of that, traders are shifting focus to ‘phase two’ of the China trade deal, which should be more challenging.

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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

Scott Petruska is Chief Currency Strategist and senior advisor for Silicon Valley Bank’s global financial services group, and is based in Boston, MA. He advises clients on currency and interest rate hedging strategies, and helps them with other aspects of global banking. He regularly writes blogs on topics covering the global financial markets, conducts client seminars and webinars, and speaks at regional financial conferences.

Petruska has more than 30 years experience in the currency and interest rate markets, and has lived and worked in Boston, Chicago, New York City, Singapore and Tokyo. Prior to joining SVB in 2009, he worked at several large international financial institutions, including National Westminster Bank, Irving Trust, Bank of New York, State Street Bank and Commerce Bank. He has been an institutional trader, product developer, analyst, salesperson and advisor.

Petruska has been awarded several professional designations, including the CFA (Chartered Financial Analyst), FRM (Financial Risk Manager) and CMT (Certified Market Technician). He earned his undergraduate degree in Finance & Banking from the University of Wisconsin.

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