Dollar slightly stronger as equity markets fluctuate on Covid-laced risk sentiment and election angst

FX markets favor the dollar while awaiting comments from Fed Chair Powell and Secretary Mnuchin later this morning. Risk sentiment favors safe haven currencies as equities seem on the edge of further weakness. The British pound recovered overnight from a two-month low and the Chinese renminbi is weaker after authorities in China halt their currency’s gains.

“In the fields of observation chance favors only the prepared mind”

Louis Pasteur
  • FX Rates
    September 22, 2020

    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 steady awaiting speeches and economic data later this morning. Jerome Powell will warn of an uncertain economic recovery and employment remaining below pre-pandemic levels when he speaks before the House Financial Services Panel along with Treasury Secretary Steven Mnuchin. The Fed Chair will also push for more fiscal support from the government, according to reports. Existing home sales and Richmond Fed’s manufacturing index both feature on the release radar today.

    GBP

    The pound dropped below the 1.2750 resistance level before recovering over 1.28. GBP got help from Bank of England Governor, Andrew Baily, who said the groundwork for possible negative interest rates would take time. Last orders! The government introduced a 10pm curfew for bars and restaurants in an effort to put the brakes on a recent surge in coronavirus infections. The prime minister will address the nation this evening and has asked those who can to work from home.

    EUR

    The euro rally has officially stalled below the 1.18 level. Markets are hesitant in front of increases in Covid cases and the potential acrimony around the US election. The US dollar will most likely increase should safe havens become desirable. On Brexit watch, France said the EU should continue to pursue a free-trade agreement with the UK, however warned that any violation from the UK would end the push.

    CAD

    The Canadian dollar is stable as the oil price holds at around $40/bbl. There is little economic data from Canada this week. The loonie is likely to trade in sympathy with other currencies around the general direction of the US dollar.

    ASIA/PACIFIC

    The red-hot Chinese renminbi weakened some after Chinese authorities set the daily rate fixing at a weaker level than most market practitioners expected.  Still, the renminbi is up 4.1% vs. a basket of currencies.

    The Japanese yen is stronger today after suffering from late-day profit taking yesterday. The yen will likely continue to gain should the equity sell-off resume.

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/trends-insights/foreign-exchange-advisory

Subscribe to receive the Daily FX Update in your inbox.

By providing your email address and clicking on the Subscribe button below, you consent to receive emails from Silicon Valley Bank for your chosen categories. You also consent to the terms of our Privacy Notice. If you have privacy questions, you may contact us at privacy@svb.com. You can withdraw your consent at any time.

Peter Compton
WRITTEN BY
Peter Compton

Insights from SVB Industry Experts

 
SVB experts provide our customers with industry insights, proprietary research and insightful content. Check out these related articles that may be of interest to you.

As risk appetite grows dollar weakens

 

Daily FX Update: Dollar stronger on global Covid surge

 

Daily FX Update: Dollar weaker for fourth day

 

Daily FX Update: Dollar flat as market awaits stimulus

 

Daily FX Update: Dollar weaker on hope for US stimulus package

 

Dollar lower amid risk-on trading; US Retail Sales beat