.png){kind=logo}
Stock market rally pauses, dollar falls for third day
The rally in global stock markets took a pause overnight, as investors weigh latest news on Covid-19 cases versus vaccines and upcoming corporate earnings. Also, expectations for inflation are at the highest level since 2013, fueling concerns that increasing bond yields may eventually impact equity valuations. The dollar is slightly lower with safe havens Swiss franc and Japanese yen as leaders. The UK pound rallied to a near three-year high. US 10-yr Treasuries are holding steady at 1.15%, oil prices are soft at 57.80 $/bbl and gold firmed for the third day, but remains within a month-long downtrend.
-
FX Rates
February 9, 2021Rates 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 1.2097 GBP/USD 1.379 USD/CAD 1.2753 AUD/USD 0.7719 USD/JPY 104.59 USD/CNH 6.427 USD/ILS 3.2507 USD/MXN 20.1014 USD/CHF 0.8935 USD/INR 72.8775 USD/BRL 5.4139 USD/SGD 1.3280 USD/DKK 6.1474 USD/SEK 8.3376 USD/NOK 8.4735
-
USD
The dollar is broadly lower against its peer currencies in-line with a pause by investors, particularly in “reflation trade” positioning. Reflation trades favor assets likely to benefit from rising economic growth and inflation. Such reflation will be characterized by steepening global yield curves and ‘risk-on’ investor sentiment, increasing demand for ‘risky’ stocks (foreign to outperform overvalued US stocks), commodities, and foreign currencies (a lower dollar).
GBPThe UK pound rallied to its highest level in nearly three years. Demand for the currency was in-line with broad weakness in the US dollar and as investors have now effectively priced out negative interest rates by the Bank of England. Friday’s UK GDP data will be watched closely for signs of growth, as the UK has underperformed most other developed economies.
EURThe euro is higher by 0.40% overnight amid optimism that Premier-designate Mario Draghi will drive much-needed structural reforms in Italy as he forms a new government. Yields on 10-year Italy government bonds fell to all-time low at 0.51%. An analyst from Natwest Markets said “Draghi could be a regime changer for Italian politics [there have been 66 governments in Italy since 1945], being both pro-EU and pro-reform.”
CADAfter an initial rally overnight, the Canadian dollar dropped slightly with little news to affect the currency. Soft oil prices were tempered by firm gold prices in their impact on the loonie. Canadian bond yields are moving at a similar upward pace as are US Treasuries: Canadian 10-yr yield at 1.00% is up from January’s low at 0.79%, while UST are at 1.15% from a low at 1.01%.ASIA/PACIFICThe Chinese yuan is slightly lower versus the dollar after the PBOC stated in its quarterly report that it was committed from making “sharp turns” in its monetary policy.
For more analysis on FX markets or information regarding SVB's FX services:
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 PrivacyOffice@svb.com. You can withdraw your consent at any time.
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. Please add us to your trusted list of senders, contacts or address book.
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.
| Source: Bloomberg | |
This article is intended for U.S. audiences only. ©2021 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and 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. |
