The Federal Reserve cut rates 25 basis points; Both Japan and England leave rates unchanged
Kathryn Garvey " | September 19, 2019
September 19, 2019
EUR/USD 1.1068 GBP/USD 1.249 USD/CAD 1.3269 AUD/USD 0.68 USD/JPY 107.96 USD/CNH 7.0935 USD/ILS 3.5162 USD/MXN 19.3282 USD/CHF 0.991 USD/INR 71.3250
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.
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