Daily
FX Update

Risk-on mood after dovish ECB and easing trade tensions, UK pound rallies

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Investors shifted into a risk-on mood after the ECB’s dovish stimulus package and rumors circulating of a potential US-China trade compromise. The UK pound rallied nearly 1% to its highest level since July amid new hopes that a no-deal Brexit can be prevented. US and European stocks rose, bond yields are higher.

“We have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men.”
George Orwell, author of 1984
  • FX Rates
    September 13, 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 US dollar index is lower by 0.35% overnight. Investors moved into risk-on mode following ECB President Draghi’s announcement of a hugely dovish monetary policy and with rumors circulating of a potential compromise in US-China trade negotiations.

    GBP

    The UK pound rallied nearly 1% overnight, and has gained 4% versus the dollar over the last week. Short-term traders unwound short positions following a media report that Northern Ireland’s largest political party has agreed to accept some EU rules after a Brexit.

    EUR

    Yesterday, the ECB revealed their monetary policy stimulus package, which met expectations -- they lowered the deposit rate by 0.10% to a record low of -0.50%; it would restart bond purchases at a rate of €20b a month; they will ease lending terms for eurozone banks; and, they offered banks tiered interest rates in order to ease pressure on lending margins. The euro moved higher amid a short-covering rally, EZ bond yields climbed and equity markets gained.

    CAD

    The loonie changed little overnight, and was the worst performing of the G-10 currencies amid the risk-on environment fueling a weaker US dollar. Oil prices were barely changed and there are no economic data releases for Canada today.

    ASIA/PACIFIC

    The Chinese yuan continued to gain against the dollar, fueled by rumors of a thawing in US-China trade tensions. Asian EM currencies and the Australian dollar joined in the rally. Asian equity markets are in the green.

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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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