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Daily
FX Update

UK polls indicate Conservative win, China tariffs may be delayed

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The UK pound gained against both the dollar and the euro, as opinion polls indicate a victory by the ruling Conservative party in Thursday’s general election. The dollar index and US equities declined as traders adjusted positions ahead of several key central bank meetings this week. Reports hit the markets this morning that tariffs on Chinese imports will be delayed.

“A nation’s exchange rate is the single most important price in its economy; it will influence the entire range of individual prices, imports and exports, and even the level of economic activity. So it is hard for any government to ignore large swings in its exchange rate…”
Paul A. Volcker, former Fed Chairman who waged war on inflation, died December 8 at age 92
  • FX Rates
    December 10, 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 dollar index edged lower in overnight trading, as traders adjusted positions ahead of meetings of the Fed, ECB, and Swiss National Bank – all are expected to hold steady. Several other central banks around the world also meet, including those of Brazil, Russia and Turkey – all are expected to cut rates. Equities are poised to open lower, 10-year bond yields dropped a point to 1.81%.

    GBP

    In overnight trading, the pound reached an eight-month high versus the dollar and a two-and half year high versus the euro. Opinion polls point to a majority victory in Thursday’s general election by the ruling Conservative party, and an increased aversion to having Labor Party leader Jeremy Corbyn as prime minister.

    EUR

    The euro edged higher, but faced headwinds from aggressive selling of the EUR/GBP cross ahead of the UK election on Thursday. Better-than-expected data out of Germany fueled demand for the currency. The closely-watched ZEW Indicator of Economic Sentiment by analysts (measuring their expectations for the next six months) increased to its highest level in nearly two years. The European Central Bank meets this week for the first time under its new president, Christine Lagarde. After easing monetary policy in September, no change is expected.

    CAD

    The Canadian dollar is little changed overnight despite White House plans to sign the free-trade deal with Canada and Mexico today. The House of Representatives must then vote for final approval, which could take place as early as next week.

    ASIA/PACIFIC

    The Chinese yuan moved higher as rumors hit the market that the US will delay the December 15 tariff threat by President Donald Trump, taking pressure off China for the time being to retaliate.

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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/foreign-exchange

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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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