No rate cut by Bank of England, but dovish takeaway
Scott Petruska, CFA | November 7, 2019
The Bank of England kept rates unchanged, but two members of their Monetary Policy Committee unexpectedly voted for a rate cut. The UK pound quickly dropped, and now approaches $1.28. The dollar index held steady. A general risk-on mood pushed global equities and bond yields higher after China and the U.S. agreed to roll back tariffs on each other’s imports.
“Be less curious about people and more curious about ideas.”Maire Curie, French-Polish physicist
November 7, 2019
EUR/USD 1.1067 GBP/USD 1.2816 USD/CAD 1.3177 AUD/USD 0.6897 USD/JPY 109.20 USD/CNH 6.9734 USD/ILS 3.4918 USD/MXN 19.1492 USD/CHF 0.9936 USD/INR 70.9650
The dollar index changed little overnight but had mixed performances against its peers. It gained against the GBP, but weakening against most other currencies, fueled by the risk-on mood.GBP
The Bank of England kept its benchmark interest rate unchanged at its Monetary Policy Committee meeting, but the pound sold off after two MPC members unexpectedly voted for a rate cut amid Brexit uncertainty and slowing global growth. The pound is near $1.28, well below highs seen near $1.2975 last week.EUR
The euro is up on the day as risk appetite improves on positive US-China trade news. Aggressive selling of the UK pound / euro cross helped fuel euro gains.CAD
The Canadian dollar edged higher following the good trade news. Traders look forward to Canada’s monthly jobs report due Friday to estimate the outlook for Canada’s central bank policy.ASIA/PACIFIC
The Chinese yuan rallied for the eighth straight day, and now trades below the key 7 yuan per dollar for the third day. Strength in the yuan is an important sign of optimism with the US-China trade war. China’s Ministry of Commerce said an agreement was reached with the U.S. to a phased rollback of tariffs on each other’s imports.
The USD/JPY currency pair moved above 109, as the risk-on mood reduces demand for the safe-haven yen.
For more analysis on FX markets or information regarding SVB's FX services:
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. We also suggest you whitelist the svb.com domain.
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.
©2019 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of 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 and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources.