Dollar up after South Korean export and German manufacturing data deepen recession
Peter Compton | September 23, 2019
The US dollar gained on weak economic data and concerns on trade wars. This week will see a heavy dose of economic data out of the US while the UN meets in New York. Boris Johnson will hear from the UK Supreme Court regarding his suspension of UK parliament.
Later Today: US Manufacturing & Services PMI for September
September 23, 2019
EUR/USD 1.0986 GBP/USD 1.2421 USD/CAD 1.3267 AUD/USD 0.6768 USD/JPY 107.50 USD/CNH 7.1214 USD/ILS 3.5159 USD/MXN 19.4581 USD/CHF 0.9915 USD/INR 70.9350
The US dollar has benefited as a safe-haven for global investors since the trade war with China began to heat up in Q2 2018. The trend continues as most economists now see the US dollar as significantly over valued. Despite the fundamentals, FX traders continue to speculate on a stronger dollar, weaker euro and weaker pound.GBP
The pound dipped on overall US dollar strength. UK Supreme Court to rule on Boris Johnson’s suspension of the UK parliament later today. PM Johnson is rumored to meet with Trump on the sides of a UN meeting this week which may lead to a commitment on a trade deal by next summer, should the UK leave the EU.EUR
The euro sank after manufacturing data for September fell for the 8th month in a row. German PMI came in at 41, vs. 43 expected, with a reading below 50 signaling contraction. Trade wars and Brexit add to uncertainty in the traditionally export-oriented German economy. ECB president, Mario Draghi, will testify to the European Parliament today where he is likely to face questions regarding negative interest rates.CAD
The Canadian dollar continued to weaken on news that oil supply from Saudi Arabia will be back to normal by month-end following the terror attack earlier this month. The weakness came despite Wholesale Trade Sales for July growing much more than expected.ASIA/PACIFIC
South Korean exports collapsed 22% for the first three weeks of September as tensions with Japan and global economic uncertainty take their toll. South Korean President Moon Jae-in is scheduled to meet Trump in New York later today with trade expected to be a key topic.
India cut the corporate tax rate in a surprise move while higher oil prices raised concerns on economic growth. Net result was a flat rupee.
The Chinese renminbi weakened on trade concerns and South Korea’s weak import/export reading.
For more analysis on FX markets or information regarding SVB's FX services:
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. We also suggest you whitelist the svb.com domain.
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.
This article is intended for U.S. audiences only.
©2019 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of 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.