Markets move towards risk-off trading as higher fuel prices cause speculation that there may be a faster pace of policy tightening. Global bond yields are trading higher while stocks are trading lower. Data out of China showed GDP slowing to one-year lows and September factory output missed economic estimates.
Wednesday: UK CPI, Eurozone CPI
Thursday: US Initial Jobless Claims,
Friday: Eurozone Manufacturing PMI, US Manufacturing PMI
October 18, 2021
EUR/USD 1.1598 GBP/USD 1.3731 USD/CAD 1.2370 AUD/USD 0.7403 USD/JPY 114.22 USD/CNH 6.4310 USD/ILS 3.2228 USD/MXN 20.3921 USD/CHF 0.9244 USD/INR 75.3475 USD/BRL 5.5296 USD/SGD 1.3498 USD/DKK 6.4145 USD/SEK 8.6601 USD/NOK 8.4274
USDThe US dollar is trading higher on increased concerns of accelerated inflation which could impact risk appetite. Higher fuel prices are causing speculation that monetary policy will tighten more quickly than initially anticipated.GBP
Money markets have shifted on expectations that the Bank of England will hike interest rates even further. Investors now see 40 bps of tightening in 2021 which will take BOE's key interest rate to 0.5% vs. the expectation of 20 bps just last week.EUR
EUR/USD holds above the 1.16 handle. News out of Europe showed that the European Central Bank is exploring an increase of its debt purchase limit by international bodies from the current 10% cap.CADThe Canadian dollar is the best performing G-10 currency this year, it is up 2.75% vs. the US dollar. The currency pair rebounded from lows of 1.2349 earlier in the trading session remaining below the 1.24 level.ASIA/PACIFIC
USD/JPY is trading slightly higher (about 0.1%) on broader market risk appetite. The New Zealand kiwi is trading lower after strengthening as much as 0.5%. The rally for the kiwi occurred after data showed third quarter annual inflation increased to 4.9% vs. 3.3% for Q2. News of an extended lockdown in the nation is putting downward pressure on the currency.
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
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.
This article is intended for U.S. audiences only.
©2022 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, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.