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Vaccine news pushes equities higher, dollar higher

News that China is testing an antiviral vaccine fueled a risk-on rally in financial markets. Global equities are higher, and bond yields and safe-haven currencies are trading lower. The US dollar is higher against most of its peer currencies,  following this morning’s unexpectedly strong ADP Employment data.

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  • FX Rates
    February 5, 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 higher with an overall risk-on sentiment in the markets. Higher US equities combined with upbeat ADP Employment data and a narrowing annual trade deficit increased demand for the dollar, pushing the dollar index to fresh YTD highs.

    GBP

    Better-than-expected UK services PMI led traders to reduce odds of a Bank of England rate cut. The UK pound initially edged higher, but then dropped to $1.30 on news that the EU may enforce rules which would negatively impact London’s key banking sector.

    EUR

    The euro is trading lower, approaching $1.10 once again. Traders are focused on the YTD low of $1.0993. Eurozone PMI’s came in mixed today: better-than-expected in Italy and the Eurozone Composite, worse than expected in Spain, and as expected in Germany.

    CAD

    The USD/CAD reached 1.33 again, but then traded lower as oil prices rose back above $51 per barrel. Canada’s trade deficit narrowed in December, due mostly to higher oil exports.

    ASIA/PACIFIC

    The People’s Bank of China set the USD/CNY reference rate lower and below the psychologically important 7 per dollar. Analysts are attempting to determine the negative impact of the coronavirus on China’s economic growth. The latest reports expect GDP Q1 growth to drop to 4.5% y/o/y, down from 6% in Q4 2019.

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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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