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Daily
FX Update

US dollar is mixed, markets await central bank meetings

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The US dollar is mixed overnight, equity markets drifted lower and bond yields edged higher. Traders await upcoming central bank meetings: the European Central Bank Thursday, and the Fed, Bank of Japan, Bank of England and Swiss National Bank next week.

“World peace begins with inner peace.”
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  • FX Rates
    September 10, 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

    The dollar showed a mixed performance overnight. The Chinese yuan made the biggest gain (+ 0.25%) versus the dollar, the Australian dollar the worst (-0.10%). US 10-year Treasury yields moved up to 1.65%, and US equity futures point to a slightly lower open.

    GBP

    The UK pound edged off earlier lows after PM Boris Johnson promised to work for an actual Brexit deal with the EU. Yesterday, he had suffered another defeat in Parliament in his attempt to get approval for an early election. Separately, BOE’s Mark Carney stated that he may not be able to cut interest rates as he did in the previous economic downturn.

    EUR

    The euro moved slightly lower as traders don’t think the upcoming ECB meeting will be very positive for the euro. On Thursday, ECB President Draghi will lay out his package of monetary stimulus - traders expect it to be a combination of rates cuts and a bond-buying program. Some analysts suggest the package may not be as aggressive as many originally thought, as critical voices within the ECB argue that a large stimulus package is not necessary given the current state of the eurozone economy.

    CAD

    The Canadian dollar rallied from session lows following the release of Canada’s Building Permits which rose 3.0% in July. Oil prices edged higher overnight ahead of an OPEC and Russia meeting on Thursday to discuss production cuts. The new Saudi Arabia oil minister, appointed over the weekend, has already expressed support for continuing cuts.

    ASIA/PACIFIC

    The USD/CNY dropped to 7.10, its lowest level since late August. China continues to open up its financial markets to foreigners. The State Administration of Foreign Exchange (SAFE) said that global investors will no longer be capped on purchases of Chinese stocks and bonds. The SAFE’s goals are to increase the use of the yuan in international transactions and to increase the amount of foreign capital coming into the Chinese markets to improve China’s persistent current-account deficit.
    The USD/JPY moved higher overnight in reaction to the slight risk-off sentiment in the marketplace. Higher USD bond yields also increased demand for dollars versus the yen.

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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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