Pound sinks on vaccine shortage fears

Peter Compton

March 22, 2021

The US dollar is benefiting from safe haven as EU vaccine export ban nears and Turkish central bank head is replaced

The dollar is stronger this morning after giving up overnight gains that stemmed from the head of the Turkish central bank leaving. Concerns that Turkey may enter another period of FX volatility sent global investors into haven assets. Also, hedge funds have moved from being net sellers of the US dollar to net buyers over the past few weeks helping to drive the dollar higher this month.

Economic Data for this Week:

Tuesday: Current Account Balance for Q4 2020

Wednesday: Durable Goods Orders for Feb and PMI for March

Thursday: Initial Jobless Claims, Q4 GDP final reading

Friday: PCE Deflator for Feb and Univ. of Michigan Consumer Sentiment for March

FX Rates
March 22, 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 1.1916
GBP/USD 1.3831
USD/CAD 1.251
AUD/USD 0.7735
USD/JPY 108.78
USD/CNH 6.5094
USD/ILS 3.303
USD/MXN 20.7251
USD/CHF 0.9252
USD/INR 72.3737
USD/BRL 5.5392
USD/SGD 1.3416
USD/DKK 6.2403
USD/SEK 8.5260
USD/NOK 8.5012
USD
The US dollar opened much stronger in early, overnight trading on news the Turkish lira had plunged in value following the sacking of the Turkish central bank head. Those gains were given back as the opening in the US approaches and the dollar now trades flat versus a basket of currencies.
GBP
The pound is weaker this morning on overall dollar strength as news the European Union plans to ban export of vaccines produced in the EU. For the UK, the result would be less vaccinations thereby delaying the UK’s lifting of lockdowns and other economic restrictions.
EUR
The euro lagged on the news of the Turkish central bank head being replaced. Some European banks may suffer due to exposure to the Turkish economy. Also, European leaders are discussing a ban on the export of vaccines produced in European countries in an effort to vaccinate more EU citizens.
CAD
The Canadian dollar is stable around the 1.25 level as the price of oil stabilizes after last week's sell-off.
ASIA/PACIFIC
Asian currencies are mixed with overall dollar strength driving sentiment. With the US dollar facing a week of heavy US Treasury offerings FX traders are watching the 10-yr yield to see if it resumes its upward march thereby supporting the US dollar.

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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