Daily FX Update: Dollar weaker on positive economic sentiment

Silicon Valley Bank

April 29, 2020

Markets ignore weak GDP reading in favor of risky assets on positive news of the anti-viral drug remdesivir

The US dollar headed for a fourth straight day of losses as more countries announced plans to begin reopening their economies. The positive investment sentiment hurt the safe-haven US dollar as did the lack of a consensus in the US as to when the US economy will reopen. US GDP numbers for Q1 showed an annualized contraction of 4.8% vs. the prior quarter. The results were worse than the -4.0% consensus expectation.

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FX Rates
April 29, 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.

EUR/USD 1.0864
GBP/USD 1.2445
USD/CAD 1.3931
AUD/USD 0.6527
USD/JPY 106.59
USD/CNH 7.0830
USD/ILS 3.5041
USD/MXN 24.1735
USD/CHF 0.9718
USD/INR 75.68
USD
The dollar is weaker on positive risk sentiment as more countries announce plans to begin reopening their economies – albeit slowly. The dollar is still 5% higher than pre-COVID levels.

The anti-viral drug, remdesivir, showed it met its primary endpoint during a government study. Although the complete data has not been released, the news led investors to speculate the drug trial results will allow the US economy to return to full strength soon.
GBP
The pound strengthened relative to the US dollar after a weaker than expected US GDP reading. The pound had been weaker due to a general perception that the UK lacks COVID testing capabilities relative to its European neighbors and therefore will be delayed in re-opening its economy.
EUR
The euro is stronger as speculators bet on a “V” shaped economic recovery after more countries begin to ease lock-down restrictions. The euro strengthened despite Fitch downgrading Italian sovereign debt.
CAD
The Canadian dollar gained on overall positive sentiment that global economies will be re-opening soon. Oil is stronger on specific details of a Russian oil output cut of 19% in response to OPEC+ reductions.
ASIA/PACIFIC
The Japanese yen lost ground versus the US dollar after encouraging news on the anti-viral drug remdesivir.

The Aussie dollar continued its march higher against the US dollar on overall USD weakness and increase in the price of oil.

Most all Asian currencies benefited from overall risk-on sentiment.

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

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Source: Bloomberg

This article is intended for U.S. audiences only.

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