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Daily
FX Update

US dollar moved lower amid easing US-China trade tensions, the ECB cut interest rates further below zero

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The USD moved lower as Trump delayed tariff increases and following the European Central Bank’s monetary policy announcement today. Global equity and bond markets are mixed as traders now wait for next week’s Fed and other major central bank meetings.

“Never confuse a single defeat with a final defeat.”
F. Scott Fitzgerald
  • FX Rates
    September 12, 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

    President Trump and China both took steps to ease tensions in the ongoing US-China trade war. Markets adopted a slight risk-on mood, reducing safe-haven demand for the dollar. Trump will be postponing the 5% extra tariffs on Chinese imports by two weeks, so China can better celebrate their October 1 national day. China, in turn, may permit extra imports of American farm goods.

    GBP

    PM Boris Johnson won a Belfast court ruling on a no-deal Brexit. The UK pound fluctuated within a narrow range, as confused FX traders reduce trading activity. Parliament is in recess after Johnson suspended it for five weeks, a ploy judged unlawful yesterday by Scotland’s highest court of appeal. Almost any Brexit outcome remains possible.

    EUR

    The euro initially moved lower today after the ECB finally announced a package of stimulus. The deposit rate cut and QE size are smaller than expected; however, the new economic projections remain dovish despite the easing package. EUR/USD fell within one pip of the YTD low of 1.0926 on ECB announcement, but has bounced back since then.

    CAD

    The Canadian dollar remained in a tight trading range overnight, and is little changed from last night’s close, just below C$1.3200. Recent strength in the loonie remains intact as positive economic data surprises from Canada continue to be supportive. Oil prices are soft while OPEC officials meet in Abu Dhabi.

    ASIA/PACIFIC

    The Chinese yuan rallied to three-week highs versus the US dollar after Trump’s announcement that he will delay tariff hikes on Chinese imports. Traders welcomed the shift from retaliatory tariff hikes to a scaling down of trade tensions.
    The Australian and New Zealand dollars rallied as US-China trade tensions ease. At the same time, selling of safe-haven yen was seen, pushing USD/JPY briefly over 108.

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

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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