Risk-on sentiment gained throughout yesterday’s trading day causing the dollar to sink. The trend continues this morning as the Producer Price Index for September (+8.6%) showed wholesale prices did not rise as much as expected (+8.7%). Some economists are starting to think of the recent increases in prices as “peak inflation”. Commodity currencies like the Australian and Canadian dollar lead gains.
“Don’t be afraid of failure. This is the way to succeed.”
October 14, 2021
EUR/USD 1.1587 GBP/USD 1.3681 USD/CAD 1.2368 AUD/USD 0.7416 USD/JPY 113.63 USD/CNH 6.4371 USD/ILS 3.2248 USD/MXN 20.6448 USD/CHF 0.9237 USD/INR 75.2588 USD/BRL 5.5177 USD/SGD 1.3491 USD/DKK 6.4219 USD/SEK 8.6429 USD/NOK 8.4655
USDThe dollar index is trading down 0.65% from Tuesday’s highs – US yields moving lower, weighed on USD. Minutes from the Federal Reserve’s September meeting showed that Fed officials broadly agreed that tapering should start mid-November or December meaning bond purchases could cease by mid-2022. Weekly Initial Jobless Claims (293K) were better than expected (320K) indicating last month's weak payroll report may have been more a function of workers quitting existing jobs to find a better one.GBP
The pound traded higher vs the USD during yesterday’s session and that has continued into this morning with the pair breaking through the 1.37 level. The pair is now, as we print, up 0.85% this week. GBP has reached a 2-week high vs. the US dollar some of which is due to profit-taking from FX speculators who had made bets on a stronger US dollar.EUREUR/USD rallied yesterday and into this morning with the pair trading over 1.16 as profit-taking and weak USD Treasury yields weigh on the greenback.
The EU and UK are braced for a new round of negotiations over the trade barriers in Northern Ireland. The EU voiced optimism that the two sides will reach an agreement in the coming weeks. Adjustments to the deal include cutting customs checks and sanitary inspections on goods.CADThe Canadian dollar is trading at its strongest level since the July 4 holiday. Oil prices continue to move higher as demand is expected to increase. Oil can be seen as a substitute for natural gas - where supplies are constrained.ASIA/PACIFICThe Chinese renminbi traded at its strongest level in four years vs. a basket of currencies. The People’s Bank of China indicated they were concerned and in turn the RMB weakened overnight.
The Australian dollar has gained 2.75% this month vs. the US dollar as commodity prices remain elevated as shortages prevail and longer-term economic growth is expected to be robust.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory
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.
Thank you for subscribing to SVB's Daily FX Update.
You're almost done. Please check your email box and follow the instructions to confirm your subscription. If you did not receive an email please check your Spam or Bulk E-Mail folder just in case the confirmation email got delivered there instead of your inbox. If so, select the confirmation message and mark it Not Spam, which should allow future messages to get through. Please add us to your trusted list of senders, contacts or address book.
Please note that we will continue to send you communications that we need to send you (for example, to keep you updated on operational changes to your account, a product or a service) or that we are required to send you by law.
This article is intended for U.S. audiences only.
©2022 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license.
The views expressed in this email are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.