Daily FX Update: Dollar lower on expectations of dovish Fed today

Kathryn Garvey

September 16, 2020

Dollar lower on expectations of dovish Fed today

Markets await Fed comments this afternoon following the FOMC meeting for signs of a change in the Fed’s stance on the future of the American economy regarding long term zero-rates, Fed balance sheet and inflation targets. The dollar is lagging behind G-10 peers ahead of the conference. The pound led gainers versus the greenback bolstered by renewed Brexit optimism.

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FX Rates
September 16, 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.

EUR/USD 1.1852
GBP/USD 1.2968
USD/CAD 1.3183
AUD/USD 0.7326
USD/JPY 104.95
USD/CNH 6.7558
USD/ILS 3.4205
USD/MXN 21.0950
USD/CHF 0.9070
USD/INR 73.5250
USD
Investors are focused on Fed Chairman Powell’s actions and comments this afternoon. The central bank is expected to leave interest rates unchanged and the “dot plot” is expected to show near zero rates through 2023. Markets are hoping they remain accommodative and are listening for comments on the bond buying program and long term plans with the Fed's balance sheet. August retail sales came in less than expected weighing on the greenback. House Speaker Pelosi commented that the October recess may be postponed until a bipartisan agreement can be announced on a new relief bill.
GBP
The UK pound led G-10 gainers helped by speculative demand ahead of US Fed meeting and renewed Brexit optimism. Reports indicate PM Johnson is willing to compromise on the bill that previously overrode initial elements of the withdraw agreement.
EUR
The euro stayed stronger versus the USD as the dollar remains under pressure ahead of Fed policy decision.
CAD
The Canadian dollar strengthened slightly on dollar weakness. Oil prices are on the rise again as Hurricane Sally disrupts US oil supply and API showed a drop in US stockpiles.
ASIA/PACIFIC
The yen improved as much as half a percent versus the dollar to the lowest level since July 31. Importer and investor demand is expected to support the movement below 105.00.

The Chinese yuan also extended gains on market optimism and resilience of long term prospects of the Chinese economy.

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

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Source: Bloomberg

This article is intended for U.S. audiences only.

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WRITTEN BY

Kathryn Garvey

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