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Daily
FX Update

News on Brexit, ECB & Hong Kong Sparking Risk-on Sentiment for Markets

The US dollar is weaker against its peers following a UK Parliament vote to make a no-deal Brexit less likely, a report that Hong Kong’s Chief Executive Carrie Lam will announce a withdrawal of controversial extradition bill, and comments from ECB President Christine Lagarde suggesting monetary policy stimulus will not be expanded.

 

“In a gentle way, you can shake the world.”

Mahatma Gandi
  • FX Rates
    September 4, 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

    The dollar is lower against most of its peers due to risk-on sentiment and weak domestic economic releases. Surprisingly weak ISM data sparked more concern for a slowing economy in the US. Traders await employment data to be released on Friday morning. The outcome of this data could influence the next monetary policy move for the Federal Reserve.

    GBP

    Sterling strengthened by 1% as traders now expect a no-deal Brexit will be less likely. UK Parliament voted to restrict Prime Minster Boris Johnson from moving forward with a no-deal Brexit on October 31, and to delay Brexit by 3 months. BoJo’s response was to insist on a snap election, where he would need two-thirds of the House of Commons to vote for his Brexit plan. Since he has now already lost his majority, this will be highly unlikely.

    EUR

    EUR/USD broke above $1.10 following comments from ECB President Christine Lagarde suggesting that the ECB will not implement further monetary stimulus. Eurozone PMI data showed a slight uptick in pace of economic growth at around 0.2%. While the Eurozone economy is growing, it is doing so at a slow pace which added to speculation for a rate cut at next week’s ECB meeting.

     

    CAD

    USD/CAD is lower this morning ahead of the Bank of Canada meeting. Investors are split on what decision Governor Poloz will make for Canada’s key interest rate. The argument for a rate cut is based on economic uncertainty given the continued trade wars and escalated fears of a recession. Higher oil prices have also supported the strengthening Canadian dollar. WTI Crude is up 1.5%.

     

    ASIA/PACIFIC

    Japanese yen weakens on risk-on sentiment as demand for safe heaven assets diminishes. News that Hong Kong will formally withdraw the controversial bill that sparked island-wide protests has supported the risk-on sentiment.

    Aussie dollar is higher from risk-on sentiment, and for a second day after the release of Q2 GDP growth at 0.5% QoQ, in-line with expectations.

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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