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Speculation of another Fed cut, declining yields and coronavirus put downward pressure on the dollar

Quantitative easing continues to be a trend to combat the economic fallout of the virus. The Bank of England cut rates overnight, and ECB President Lagarde has also encouraged EU leaders to follow suit. The dollar remains under pressure as investors pay close attention to CPI and budget news out today, and anticipate a further cut from the Fed.
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  • FX Rates
    March 11, 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.


  • USD
    Despite advancing yesterday, the US dollar pared some gains and has returned to the 96.00 level. CPI figures due out today showed YOY inflation figures of 2.3% versus 2.2% expected. The dollar remains under heavy pressure on rising bets of a further rate cut by the Fed, declining yields and the unknown extent of coronavirus impact on the US economy.

    In the US Presidential primary, democratic candidate and former VP Joe Biden won several states, almost cinching the nomination for November’s Presidential election.

    GBP
    In support of the economy, the BoE lowered interest rates from 0.75% to 0.25% and announced plans for a new lending scheme and a reduction of the countercyclical capital buffer for commercial banks. Quantitative easing continues to be a vaccine of choice in treating economic fallout of the coronavirus. The UK unveils their first post-Brexit budget today in which major investments are anticipated. The pound was initially supported by the rate cut and further support is expected following the budget release.
    EUR

    ECB President Christine Lagarde gave a strong message to EU leaders yesterday where she encouraged leaders to act sooner rather than later on fiscal policy on coronavirus fallout. The euro gained, paring some losses from yesterday and eyes look to Thursday’s ECB meeting for further direction.

    CAD
    USD selling bias leaves USD/CAD depressed today, but downside has been limited as the loonie is undermined by weaker oil prices as a fallout to a flood of supply in the oil markets.
    ASIA/PACIFIC

    The Japanese yen is benefitting from its safe-haven status as renewed coronavirus fears have been bolstering demand for safe-havens. China has reported a slowing in new cases of coronavirus as containment strategies appear to be working.

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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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Kathryn Garvey
WRITTEN BY
Kathryn Garvey

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