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Daily
FX Update

The Federal Reserve cut rates 25 basis points; Both Japan and England leave rates unchanged

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Yesterday’s FOMC announcement was largely in-line with market expectations as the Fed cut rates by 25 basis points. Chairman Jerome Powell emphasized that the Fed will be data dependent and monetary policy will be determined on a meeting-by-meeting basis. Powell’s comments during the press conference were generally hawkish which left the dollar relatively strong. The BoE and BoJ both left rates unchanged with the BoE citing Brexit uncertainty and the BoJ punting any decision until the October meeting.
“You can find peace amidst the storms that threaten you.”
Joseph B Wirthlin
  • FX Rates
    September 19, 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

    As expected, the Fed cut rates by 25bps yesterday, providing initial support to the dollar. The central bank’s projection for future rate cuts was not unanimous with 7 members expecting another rate cut this year, 5 expecting no change and 5 expecting a raise in rates next year. On the data front, the Philly Fed Manufacturing Index came in at 12.0 beating estimates and Jobless Claims came in at 208,000 which was slightly lower than expected.

    GBP

    The pound held steady after BoE left rates unchanged and again warned of uncertainty regarding Brexit. The bank messaged that repeated delays to Brexit may warrant lower interest rates and that rates would likely increase if uncertainty was lifted. In a no-deal scenario, the bank said that rate cuts are more than likely. According to British officials, BoJo may designate Northern Ireland as a “special economic zone” on the contentious Irish Backstop. The UK Supreme Court will hear the final day of legal arguments surrounding PM Johnson’s suspension of Parliament.

    EUR

    The euro is slightly higher today after being met with buying interest following a rebound in yields on the German 10-year. The ECB’s Francois Villeroy called on governments to use fiscal measures to complement monetary policy in an effort to overcome economic difficulties.

    CAD

    The Canadian dollar climbed this morning as WTI oil prices rose 2.1% to $59.10 per barrel. Retail sales are due out tomorrow with the markets looking for a solid gain of 0.6%.

    ASIA/PACIFIC

    The yen is stronger versus the dollar after the BoJ kept rates unchanged, punting the easing decision until October’s meeting.

    The yuan weakened after the PBOC kept reverse-repo rates on hold.

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

Kathryn Garvey is a foreign exchange Associate for Silicon Valley Bank’s global financial services group and has been with SVB since July of 2018. Prior to SVB Kathryn completed co-op internships at Innosight, Market Metrics, and The TJX Companies.

Garvey graduated from Northeastern University in 2018 with a bachelor’s degree in finance, and marketing with elective coursework in entrepreneurship and innovation from Northeastern University.

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