Daily FX Update: Investor optimism weakens safe haven currencies

Peter Compton

January 19, 2021

Investor optimism weakens safe haven currencies

The dollar began the trading week by losing ground relative to most currencies while commodity currencies gained on hopes stimulus spending will rescue US and global economic activity. The Japanese yen joined the greenback as safe haven currencies lost ground. Financial markets will look for clues on fiscal policy during Janet Yellen’s comments on Capital Hill later this morning and for a peaceful inauguration on Wednesday.

Today: Janet Yellen Senate confirmation hearing for Treasury Secretary nomination

Wednesday: Presidential inauguration

Thursday: Initial jobless claims, Housing Starts for December

Friday: PMI for January and Existing Home Sales

FX Rates
January 19, 2021

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 1.2136
GBP/USD 1.3611
USD/CAD 1.2741
AUD/USD 0.7715
USD/JPY 103.9500
USD/CNH 6.4849
USD/ILS 3.2385
USD/MXN 19.6773
USD/CHF 0.8877
USD/INR 73.1700
USD
FX markets sold the dollar to begin the week on optimism Biden’s $1.9T in stimulus spending will help bridge the US economy to a full recovery later this year. Also, financial markets see the Federal Reserve holding its current ultra-easy monetary policy throughout 2021 and possibly as far as 2023.
GBP
The pound is stronger vs. the US dollar this morning on overall dollar weakness. Financial markets are looking beyond the UK’s current Covid related lockdown and see a stronger economy once vaccinations are completed and Brexit uncertainties are gone.
EUR
The euro is stronger as FX traders see the US dollar resuming its weakening trend which began last March. The European Union will begin selling bonds to help pay for European stimulus agreed last July. The bond sales may become a steady source of euro demand if investors outside the eurozone choose to bid for the bonds.
CAD
The Canadian dollar is stronger this morning following all commodity currencies higher despite global demand for oil in question as Covid cases rise in parts of China and lockdowns continue to disrupt travel plans.
ASIA/PACIFIC
The Chinese yuan is stronger as FX markets search for clues on incoming President Biden’s policies on China. The Chinese authorities are seen as trying to keep the yuan stable leading into next month's Lunar New Year week-long holiday.

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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WRITTEN BY

Peter Compton

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