Optimism lifts currencies as US stimulus package seems closer and Brexit negotiations continue.

A US dollar index hit its lowest since fall 2018 as risk adverse FX traders favor the Chinese renminbi, Japanese yen and Swiss franc. Also, financial markets are becoming less concerned about volatility from the US election and hopeful of a new stimulus from Washington DC. A trade agreement between the UK and the EU seems possible helping the euro and pound with both sides negotiating after Boris Johnson’s self-imposed October 15 deadline came and went. The Chinese renminbi strengthens again.

“The way to get started is to quit talking and begin doing.”

Walt Disney
  • FX Rates
    October 21, 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 is weaker for a fourth day and bumping along lows for the year. With Republicans and Democrats continuing to negotiate a stimulus package, the financial markets are betting a deal will get done soon. Also, financial markets seem to have either priced in a contested US presidential election or discounted such an event. The dollar’s safe-haven status is weakening as the yen and Swiss franc both strengthen.

    The Federal Reserves Beige Book will be released this afternoon.

    GBP

    The British pound gained almost a full percent after the European Union's chief Brexit negotiator said an agreement with the UK was within reach.

    EUR

    The euro gained vs. the US dollar despite German PPI continuing to decline although it came in above expectations at -1.0% YoY, and 0.4% MoM. FX speculators piled into bets the euro will hit 1.20 as it did in September. With Biden holding a substantial lead in the polls, financial markets are hoping for a smooth transition of power and better trade relations from the US.

    CAD

    The Canadian dollar is flat today on weaker oil prices. A potential confidence crisis is brewing in Canada with conservative opposition leaders fanning the flames on a potential ethics scandal surrounding Covid-related funds for schools. Prime Minister Trudeau has raised the possibility of a new General Election should the conservatives not back down.

    ASIA/PACIFIC

    Asian currencies all strengthened relative to the US dollar as hopes of a stimulus package in the US and a Biden win relieved uncertainty. The Chinese renminbi continues to strengthen as a new US president may help relations and the Chinese economy continues to grow. The Japanese yen gained as did the Australian dollar on overall US dollar weakness.

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/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.

Peter Compton
WRITTEN BY
Peter Compton

Insights from SVB Industry Experts

 
SVB experts provide our customers with industry insights, proprietary research and insightful content. Check out these related articles that may be of interest to you.

Daily FX Update: Dollar weaker as vaccine producers seek approvals

 

Daily FX Update: Dollar’s slide set to continue

 

Dollar heavy in thin trading

 

Daily FX Update: Currencies confined to narrow range ahead of Thanksgiving holiday

 

Daily FX Update: Risk-on sentiment persists

 

Daily FX Update: Dollar falls to two-year lows amid month-end flows and vaccine optimism