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US economy receives more indications of strength confirming the dollar rally still intact

Despite being down 2% in Q4, the US dollar is up 6.5% since April 2018. Continuous strong economic data out of the US leaves FX markets believing the rally will continue. The British pound is stronger today on Brexit concerns and the Canadian dollar fell on weak retail sales. Trading is light going into the Holiday week. 

“Order and simplification are the first steps toward the mastery of a subject.”

Thomas Mann
  • FX Rates
    December 20, 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 final reading for Q3 GDP (+2.1%) was in-line with expectations but Personal Consumption was higher at 3.2%. The dollar, already stronger vs. the euro and Canadian dollar, shot even higher on the economic data. More data expected later this morning on inflation for November and University of Michigan Sentiment survey.

    GBP

    The British pound is stronger today in volatile trading after significant losses yesterday afternoon. The pound is down 3.4% vs. the dollar since the euphoria of Boris Johnson's election on December 12. UK Parliament is now back in session with the priority of passing the EU withdrawal agreement. The agreement contains a provision that the UK will leave the EU by December 31, 2020 if there is a new trade agreement in place or not. Passage is not expected until January.

    EUR

    The euro weakened after economic data across the eurozone failed to show much strength. 

    CAD

    The Canadian dollar is weaker this morning after Retail Sales for October (-1.2%) came in weaker than expected (+0.5%). Year-over-year retail sales fell -0.6%. The one bright spot was cannabis sales which grew 4.9%.

    ASIA/PACIFIC

    The Indian rupee seems to have entered a trading range of between 70.50 and 72.50 since August 5. The currency is weaker today despite strong foreign investment inflows, especially into the Indian equity market. The Australian dollar continues to struggle to snap a bearish trend which began in early 2018 at 0.80 USD to an Aussie dollar.  Since the low of 0.6699 on October 2 the A-dollar has rallied 2.75% to 0.6897.  Market participants are concerned about the Australian economy.

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

Peter Compton is a senior foreign exchange advisor for Silicon Valley Bank’s global financial services group, and has been with SVB since 2007. He helps clients design and implement hedging strategies for foreign currency exposures. Compton has over 20 years experience in global financial markets.

Before joining Silicon Valley Bank, Compton spent seven years working in the European equity markets. Based in Germany, he spent four years with HSBC and three years as Head of Equity Sales for ABN-AMRO in Frankfurt. Prior to his work overseas, Compton spent seven years with Bank of America in San Francisco as an equity and fixed income derivative specialist.

Compton holds a bachelor's degree in business and management from the University of Rhode Island and a Master's of Business Administration from San Francisco State University.
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