Daily FX Update: Dollar regains lost ground

After initially sinking on the dovish Fed statement earlier this week, the dollar is roughly where it started the week

The dollar is flat this morning after gaining throughout yesterday. Higher Treasury yields, especially the 10-yr, brought investors into the greenback. The markets largely ignored the first high-level talks between the US and China since Biden took office. This morning's Fed announcement to end the SLR relief for banks kept the sell-Treasuries/buy-the-dollar trade alive. The pound sinks on profit-taking.

"The more difficult the victory, the greater the happiness in winning."
Pele
  • FX Rates
    March 19, 2021

    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 Federal Reserve announced an end to a Covid relief mechanism sending US Treasury yields and the US dollar higher. The Supplementary Leverage Ratio (SLR) had been modified temporarily and the Fed said this morning the relief for banks would expire at the end of the month. The gain in the 10-yr Treasury and the dollar proved temporary as the news was somewhat expected.

    GBP

    The pound is weaker this morning after briefly touching 1.40 earlier this week.  Yesterday’s Bank of England meeting held no surprises as rates were left unchanged. Similar to the Federal Reserve, the British central bank is showing little concern for the recent rise in government bond yields. The pound has been quite strong over the past couple months and many see today’s selloff as profit-taking.

    EUR

    The euro is weaker this morning after giving back all its gains from earlier in the week. Covid related restrictions are hitting the European economy yet again as Paris goes into lockdown following similar measures in Germany and Italy. FX traders will favor the dollar as long as US Treasury yields are climbing and vaccinations lag in Europe.

    CAD

    The Canadian dollar weakened versus the US dollar despite January Retail Sales data coming in better than expected at -1.1% vs forecast of -3%. The price of oil is steady below $60/bbl for WTI after falling along with equities throughout most of yesterday.

    ASIA/PACIFIC

    The Japanese yen is flat versus the dollar despite the Bank of Japan clarifying their target rate for the 10-year JGB is plus or minus 0.25% around zero where markets had thought the range to be 0.20%.

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 PrivacyOffice@svb.com. You can withdraw your consent at any time.

Peter Compton
WRITTEN BY
Peter Compton

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.

Markets sell off amid variant concerns

 

Daily FX Update: Dollar at sixteen-month highs ahead of Thanksgiving holiday

 

Daily FX Update: Dollar stronger and Treasury yields rise

 

Daily FX Update: Dollar climbs broadly following Powell nomination

 

Daily FX Update: Risk-off trading on renewed concerned of lockdowns

 

Daily FX Update: The greenback trades mixed after steady US jobless claims