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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.


    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.


    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.


    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.


    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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About the Author

Scott Petruska is Chief Currency Strategist and senior advisor for Silicon Valley Bank’s global financial services group, and is based in Boston, MA. He advises clients on currency and interest rate hedging strategies, and helps them with other aspects of global banking. He regularly writes blogs on topics covering the global financial markets, conducts client seminars and webinars, and speaks at regional financial conferences.

Petruska has more than 30 years experience in the currency and interest rate markets, and has lived and worked in Boston, Chicago, New York City, Singapore and Tokyo. Prior to joining SVB in 2009, he worked at several large international financial institutions, including National Westminster Bank, Irving Trust, Bank of New York, State Street Bank and Commerce Bank. He has been an institutional trader, product developer, analyst, salesperson and advisor.

Petruska has been awarded several professional designations, including the CFA (Chartered Financial Analyst), FRM (Financial Risk Manager) and CMT (Certified Market Technician). He earned his undergraduate degree in Finance & Banking from the University of Wisconsin.

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