US Commerce Secretary Ross’ optimism on China trade deal hits some safe-haven and helps Aussie and Kiwi dollars
Peter Compton " | November 4, 2019
The Japanese yen and Swiss franc both lost ground after Secretary Ross’ comments in Bangkok. But the US dollar lost relative to some emerging market currencies as a cease-fire in the US/China trade war would help export oriented markets. UK pound traders focus on election results and post-Brexit impact on government spending.
Later today: Final reading for September Durable Goods Orders
Tuesday: October Markit PMI, October Non-Manufacturing ISM, September Trade Balance
Wednesday: Q3 Non-Farm Productivity and Labor Costs
Friday: Wholesale Inventories for September (final reading), Univ. of Michigan Consumer Confidence
November 4, 2019
EUR/USD 1.1155 GBP/USD 1.2916 USD/CAD 1.3152 AUD/USD 0.6905 USD/JPY 108.43 USD/CNH 7.0322 USD/ILS 3.5182 USD/MXN 19.1143 USD/CHF 0.9873 USD/INR 70.7650
The dollar strengthened overnight after many FX traders repositioned following Brexit developments last week as well as the Fed announcement. Economic growth reemerges as dominant factor in the currency markets, at least for now, with a strong US economy helping the greenback. Asset managers are buying US denominated assets in fear of missing out on a year-end rally.GBP
The pound weakened slightly as markets began to calculate the impact of a Labor Party or Tory Party win in the December 12 general election. Polls over the weekend showed the Conservatives losing some of their lead. Either party is expected to avoid a hard Brexit, thereby giving focus to post-Brexit scenarios regarding government spending and overall UK economic growth.EUR
The euro is slightly weaker this morning as financial markets await a speech by the new President of the European Central Bank, Christine Lagarde. The euro gained 2.3% vs. the US dollar in October as European stocks approach 20% gains for the year. Political issues in Spain and Italy are overlooked as the financial markets become more optimistic on potential new government spending by Germany and the Netherlands.CAD
The Canadian dollar lost ground on general USD strength mostly coming from positive comments by US Commerce Secretary Ross at a regional summit in Thailand. The price of oil could not help the loonie despite oil trading at 6-week highs.ASIA/PACIFIC
Trade talk optimism led the New Zealand dollar and Australian dollar higher. The Japanese yen lost ground as safe-haven assets lost some appeal.
The Indian rupee has tended to follow the Chinese renminbi in recent years when there is a lack of Indian-specific news. Both currencies traded weaker relative to the US dollar today. Investors see the settlement of trade disputes helping the US economy and therefore the dollar.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory