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Daily
FX Update

Third quarter GDP beats estimates giving lift to dollar

 | 

Better than expected Q3 GDP data helped the dollar stem three days of losses.

Financial markets await this afternoon’s Federal Reserve announcement on interest rates - most economists expect a 25 bp rate cut. The Fed’s comments on expectations for rates will be scrutinized as some of the factors leading to this summer’s two rate cuts have since dissipated.

“Nothing in life is to be feared, it is only to be understood”
Marie Curie
  • FX Rates
    October 30, 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

    Third-quarter GDP came in at 1.9%, ahead of the 1.6% expected, but down from Q2’s 2%. The dollar rallied from overnight lows.

    The Federal Reserve will take the spotlight at 2pm Eastern time and is expected to deliver its third consecutive interest rate cut. The Fed’s approach to the future path of monetary policy will be watched carefully with some economists arguing there is little reason for additional cuts. The dollar would benefit should the Fed signal they are done cutting rates.

    GBP

    The pound rallied on news the UK Parliament agreed to the Prime Minister’s motion for a snap general election on December 12. Most will consider the election to be a proxy referendum on Brexit. More important for the value of the pound, the financial markets see little chance of the UK crashing out of the European Union without some kind of pre-negotiated trade agreement in place.

    EUR
    French GDP and German inflation data came in more or less in-line providing some support to the euro. Also helping the common currency are comments by incoming president of the European Central Bank, Christine Lagarde. She reiterated her predecessor’s plea for countries like Germany and the Netherlands, with strong fiscal budgets, to increase spending to help keep the eurozone from falling into a broad recession.
    CAD

    The Canadian dollar is flat in early trading as FX markets await the US Fed meeting as well as the Bank of Canada meeting and announcement this afternoon. Should the Canadian central bank sound more dovish in its comments then the loonie will weaken – especially if the Fed signals rate cuts are done for now.

    ASIA/PACIFIC

    The Japanese yen lost ground to the dollar after the US GDP data came in better than expected. Trading was very light in Asian currencies overnight as the markets await this afternoon’s Fed announcement.

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/foreign-exchange

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About the Author

Peter Compton is a senior foreign exchange advisor for Silicon Valley Bank’s global financial services group, and has been with SVB since 2007. He helps clients design and implement hedging strategies for foreign currency exposures. Compton has over 20 years experience in global financial markets.

Before joining Silicon Valley Bank, Compton spent seven years working in the European equity markets. Based in Germany, he spent four years with HSBC and three years as Head of Equity Sales for ABN-AMRO in Frankfurt. Prior to his work overseas, Compton spent seven years with Bank of America in San Francisco as an equity and fixed income derivative specialist.

Compton holds a bachelor's degree in business and management from the University of Rhode Island and a Master's of Business Administration from San Francisco State University.
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