Dollar lower, equities higher in mild risk-on mood

The dollar index moved lower and equities higher in a mild risk-on mood in the markets, despite mixed signals from the government. Late yesterday, Trump told Republicans to stop negotiating with Democrats on the stimulus package, effectively spurning comments by Fed Chair Powell that further government fiscal stimulus is now required to fuel economic growth. The market’s mood then improved after Trump tweeted support of several new financial aid measures, including checks to US citizens, aide to airlines and payroll protection. Global equities were mixed: higher in Asia, lower in Europe and a higher open in the US. US Treasury yields remain firm given expectations of a Biden victory leading to greater stimulus. Oil prices are soft and gold firm.

“In the practice of tolerance, one’s enemy is the best teacher.” 

The Dalai Lama
  • FX Rates
    October 7, 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 dollar is lower on the back of a mild risk-on mood in the markets. Investors seem fueled by liquidity-driven demand in the face of confusion related to government fiscal stimulus. Fed Chair Powell spoke yesterday about the Fed’s exhausted efforts to promote economic growth, and the need for fiscal stimulus to step in. Late yesterday, Trump stopped negotiations between Pelosi and Mnuchin to deliver a new fiscal stimulus package. Later, the market’s mood improved after Trump tweeted support of several financial aid measures, including checks to US citizens, aid to airlines and further payroll protection.

    GBP

    The UK pound was steady versus the dollar, but underperformed the euro following news that the UK will follow through with their plan to quit Brexit trade talks if no deal is reached by PM Johnson’s October 15 deadline.

    EUR

    The euro firmed overnight, but remains under $1.18. Investors are digesting comments by Bundesbank President Weidman. The CFTC reported that large currency speculators have accumulated the largest long positions in the euro since early 2018.

    CAD

    The loonie made slight gains against the broadly weaker US dollar. Soft oil prices had little impact. Traders await Canadian employment data on Friday. A second wave surge in Covid-19 cases continues.

    ASIA/PACIFIC

    China is celebrating Golden Week, so Chinese markets are closed.

    In the risk-on market mood, the Japanese yen was the only currency to weaken against the dollar overnight. Covid-19 cases in Japan continue to decline from the peak in early August.

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/trends-insights/foreign-exchange-advisory

Subscribe to receive the Daily FX Update in your inbox.

By providing your email address and clicking on the Subscribe button below, you consent to receive emails from Silicon Valley Bank for your chosen categories. You also consent to the terms of our Privacy Notice. If you have privacy questions, you may contact us at privacy@svb.com. You can withdraw your consent at any time.

Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

Insights from SVB Industry Experts

 
SVB experts provide our customers with industry insights, proprietary research and insightful content. Check out these related articles that may be of interest to you.

As risk appetite grows dollar weakens

 

Daily FX Update: Dollar stronger on global Covid surge

 

Daily FX Update: Dollar weaker for fourth day

 

Daily FX Update: Dollar flat as market awaits stimulus

 

Daily FX Update: Dollar weaker on hope for US stimulus package

 

Dollar lower amid risk-on trading; US Retail Sales beat