Daily FX Update: Markets retreat, retail sales disappoint

Scott Petruska, CFA

November 17, 2020

Markets retreat, retail sales disappoint

Equity markets retreated from their recent rally, which had produced fresh record highs in many indices around world. Investors are weighing encouraging news regarding a new Covid-19 vaccine against depressing news that the virus continues to spread in Europe and the US. The dollar edged lower, particularly against the Chinese yuan – the USD/CNY fell to fresh 2½ year low. US Treasury yields dropped after US Retail Sales for October missed expectations. Oil and gold prices are steady.

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FX Rates
November 17, 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 1.1872
GBP/USD 1.3255
USD/CAD 1.3096
AUD/USD 0.7296
USD/JPY 104.11
USD/CNH 6.5578
USD/ILS 3.557
USD/MXN 20.4108
USD/CHF 0.9101
USD/INR 74.4600
USD
The dollar index is lower and fairly mixed across its peer currencies. The Chinese yuan continues to gain following the huge regional trade deal signed by 15 Asian nations on Sunday. Overnight trading was light, as traders digest weak US Retail Sales for October, the continuing pandemic, and a Washington that remains stalled on a fiscal stimulus package.
GBP
The UK pound is trading higher on indications that the UK-EU trade negotiations are making promising advances. Market chatter is that a deal may be signed as early as next week.
EUR
The euro is up slightly overnight in-line with broad dollar weakness. A dearth of eurozone economic news recently has led to a drop in EUR/USD option volatility to its lowest level since May. 3-Month implied volatility is just above 6%. The currency pair is trading near the top of its two month trading range: $1.16-1.19.
CAD
The Canadian dollar weakened overnight, but remains within its recent 1.30-1.32 trading range. Canadian Housing Starts (Oct) came in weaker than expected this morning, while Wholesale Trade Sales (Sep) exceeded expectations.
ASIA/PACIFIC
The Chinese yuan continues to outperform, advancing against the dollar to its strongest level in more than two years. Traders are optimistic about China’s relatively strong economic recovery, and investors are attracted to China’s interest rate premium over other major nations. A Biden presidency is expected to be friendlier to China.

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

Scott Petruska, CFA

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