.png){kind=logo}
Dollar weakens on lower real yields, as equities and bonds pause
The dollar weakened overnight as traders focused on falling US real yields, resulting from an unexpected rise in US inflation. Better-than-expected Initial Jobless Claims released this morning fell to 963k, the first time below 1 million since before the pandemic. Markets had a muted reaction to the good news, and are focused on the stalemate in Congress over another coronavirus stimulus package.
-
FX Rates
August 13, 2020Rates 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.
EUR/USD 1.1839 GBP/USD 1.3107 USD/CAD 1.3216 AUD/USD 0.7168 USD/JPY 106.9100 USD/CNH 6.9421 USD/ILS 3.4049 USD/MXN 22.3202 USD/CHF 0.9096 USD/INR 74.8463
-
USD
The dollar is lower, continuing the trend in place since March 20 when it spiked in a market panic into safe-havens. Yesterday’s pop in July’s CPI inflation to 1.0% YoY led traders to focus on real US yields: defined as nominal yields less the rate of inflation (US Treasury 2-year at 0.18% less 1.00% = -0.82%). Congress is in a stalemate on the stimulus package with little hope of an agreement in the near term, as the two sides are at least $1 trillion apart, with Nancy Pelosi and Secretary Steven Mnuchin engaged in verbal sparring.
GBPThe UK pound rallied in-line with the euro. It’s trading near $1.31, up nearly 0.5% overnight. Buyers emerged following upbeat tweets by UK’s negotiator in the UK/EU talks, David Frost. There was no UK economic data released today.
EURThe euro is trading firmly over $1.18, up nearly 0.5% from yesterday’s close. The bearish dollar is the key factor in the euro’s strength, but it was helped by somewhat higher optimism with a UK/EU Brexit agreement following upbeat tweets by UK’s negotiator David Frost.
CADThe loonie gained versus the USD within the broad-based dollar sell-off. It strengthened for the fourth straight day, and has been the second best performing major currency this month (up 1.43%), after the Norwegian krone (up 2.36%). Oil prices are holding around $42.50 a barrel.
ASIA/PACIFICAs a region, Asian currencies underperformed overnight, despite Asian equities outperforming other regions and commodities prices being generally higher. Foreign Direct Investments into China for July rose 15.8% versus 7.1% in June.
The USD/JPY currency pair rose for the fifth straight day. It nearly reached 107.00, well off its low of 104.19 on July 31.
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
Subscribe to receive the Daily FX Update in your inbox.
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.
| Source: Bloomberg | |
This article is intended for U.S. audiences only. ©2021 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 and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. |
