Dollar soars, markets in great turmoil

The US Dollar Index gained another 1% overnight, up 4.3% in just eight trading days. The biggest currency movers were the UK pound, dropping 1.8%, and the Australian dollar, -1.6%, versus the dollar. Equity markets are all lower, Europe's suffering the most. Investors are also dumping bonds in a big way, as their role as safe havens is changing at this time. Governments around the world, throwing huge monetary and fiscal stimulus into their respective economies, have incited a remarkable rise in yields.

“Extraordinary people survive under the most terrible circumstances and they become extraordinary because of it.”
Robertson Davies, Canadian novelist, journalist
  • FX Rates
    March 18, 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

    The dollar, in its role as a financial safe-haven, continues to make gains as stress dominates global markets. Since hitting its lowest level of the year on March 9, the US Dollar Index (DXY) has gained relentlessly against its peers. The well-monitored index just this morning exceeded 100 for the first time since 2017. US equities are poised to open in deep negative territory, set to open near the 5% limit-down trigger.

    GBP

    The UK pound dropped to its lowest level against the US dollar in 35 years. It has fallen nearly 10% in the last nine days, caught up in the general flight to the safe-haven US dollar. The fiscal stimulus announced by Chancellor of the Exchequer Rishi Sunak, to help individuals and firms in the UK, did not provide the confidence needed for global investors.

    EUR

    The euro has dropped 0.65% overnight, and to new lows for the month. Currently near $1.0925, February’s low was $1.0785. The European Central Bank is working with Italy’s central bank to ensure market stability and liquidity.

    CAD

    President Trump has just announced that he is temporarily closing the border with Canada. Earlier, the Bank of Canada said they won’t be announcing any new measures to support the Canada’s financial system. The double whammy has caused the USD/CAD currency pair to soar above C$1.44, and to its highest level in five years.

    ASIA/PACIFIC

    The Japanese yen has acted as a safe-haven, but still relinquished some of its value versus the dollar.
    The Chinese yuan has been kept fairly steady by China’s central bank near the key 7.00 level. Speculators are building up short CNH positions in anticipation of a weaker CNY.

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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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