Concerns of a lockdown in the US faded creating demand for commodities and other risk assets. Short-term interest rates in the US broke through recent highs as expectations of tighter monetary policy return. The increase in rates drew in buys of US dollars just as higher commodity prices lifts the Canadian and Australian dollars.
“Be so good they can’t ignore you.”
-
FX Rates
December 7, 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 1.1242 GBP/USD 1.3227 USD/CAD 1.2666 AUD/USD 0.7105 USD/JPY 113.65 USD/CNH 6.3671 USD/ILS 3.1415 USD/MXN 21.2309 USD/CHF 0.9254 USD/INR 75.42 USD/BRL 5.6420 USD/SGD 1.3672 USD/DKK 6.6144 USD/SEK 9.1106 USD/NOK 9.0484
-
USD
The dollar is stronger this morning on higher Treasury rates especially in the short end of the curve. However, the return of risk appetite will likely limit dollar gains relative to most currencies. The euro and British pound both weakened significantly relative to the dollar as COVID lockdowns in those areas seem more likely.
GBPThe pound is trading at its weakest levels of the year relative to the US dollar. FX markets are anticipating next week’s Bank of England meeting for clues on the central bank’s monetary policy changes. Bank of England Deputy Broadbent said UK inflation may surpass 5% in early 2022 although he expects the transitory impact will begin to pass.
Growth in the UK’s construction industry was at its fastest pace in four months in November, after shortages in materials eased.
EURThe euro continues to trade close to its weakest levels relative to the US dollar since summer last year. ECB member Holzmann stated that he supports decoupling bond purchases and interest rate hikes. Holzmann believes interest rates can be increased while purchases continue.
Restrictions increase around Europe as the new Omicron variant spreads – France closes nightclubs for 4 weeks and vaccinates vulnerable children.
CADThe Canadian dollar kept its overnight gains as the price of oil rose 2%. Since peaking in November at $85/bbl, the price of oil then sunk to $65 to start December. Concerns around Omicron variant and potential lockdowns were expected to cause a significant reduction in demand for oil. Today WTI is trading at $71/bbl helping the loonie to rebound as well.
ASIA/PACIFICThe Chinese renminbi gained overnight as FX markets continued to digest the Chinese central bank's recent cut in reserve requirements. The renminbi will certainly test the 6.36 lows from May of this year and likely the 6.25 level in coming months.
The Australian dollar rebounded off last week's low of 0.70 as commodity prices increased on expectation of continued global economic growth.
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/foreign-exchange-advisory
| Source: Bloomberg | |
This article is intended for U.S. audiences only. ©2022 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, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. |
