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
Tuesday: S&P Core Logic house price data from July, Conference Board Consumer Confidence
Wednesday: Mortgage applications (weekly), New Home Sales for August
Thursday: GDP for Q2 (final reading), inventory data, pending home sales
Friday: Core PCE (Sept.), Durable Goods (Aug.). Univ. of Michigan Consumer Confidence
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:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory