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Daily
FX Update

Dollar remains firm as global tensions rise

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Safe-haven demand is keeping the dollar firm as global tensions dominate the news. The Hong Kong crisis, Brexit doubts, Turkey fighting in Syria and Spain/Catalan’s potential law and order problem are putting geopolitical risks on the front burner. Confused traders seem to be pulling back from the markets and trying not to over-react. Little movement is seen in the other safe-haven assets - T-Bonds, gold, Japanese yen or Swiss franc.

“If you’re not confused, you’re not paying attention"
Tom Peters, American writer
  • FX Rates
    October 16, 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 index remains firm as volatility picks up in the currency markets due to a nasty buildup of worrying global events. US T-bond yields are a few basis points lower and equities will likely open lower, despite updated earnings from Bank of America.

    GBP

    The UK pound whipped around in Europe, ending the trading session slightly lower, as doubts grow over Brexit. Northern Ireland’s Democratic Unionist Party (DUP) has called into question UK PM Boris Johnson’s newly proposed withdrawal agreement.

    EUR

    The euro is little changed overnight, despite anxieties related to Brexit. Eurozone inflation unexpectedly hit a three-year low of 0.8%, which has reignited concerns with the Eurozone economy and the ECB’s ability to get inflation up to its 2.00% target.

    CAD

    The CAD was steady overnight. Oil prices were lower, but FX traders were unmoved. Canada’s CPI for September will be released later in the day. Expectations are for inflation to climb to 2.1% from 1.9% per annum in August, which some traders say may influence the Bank of Canada to pursue more of a wait-and-see attitude for future rate cuts. The Bank of Canada meets next on October 30th.

    ASIA/PACIFIC

    The Chinese yuan moved little overnight, even after China threatened to retaliate if the US Congress passes a bill offering support to pro-democracy protesters in Hong Kong.
    The USD/JPY currency pair retained yesterday’s gains, nearly touching 109 overnight. Safe-haven buying of the yen was not seen, despite heightened geopolitical risks. 

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/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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