The US Dollar dips whilst stocks rally, in response to Jerome Powell's speech on normalizing policy. Boris Johnson faces MPs today as pressure mounts for him to resign amid the most recent lockdown gathering revelation.
January 12, 2022
GBP/USD 1.3633 GBP/EUR 1.1993 EUR/USD 1.1367 USD/CAD 1.2552 EUR/CHF 1.0499 EUR/SEK 10.2766 EUR/NOK 9.9425 EUR/DKK 7.4409 USD/ILS 3.1136 AUD/USD 0.7206 NZD/USD 0.6782 USD/SGD 1.3509 USD/JPY 115.34 USD/CNH 6.3702 USD/INR 73.94 EUR/ILS 3.5401 GBP/ILS 4.2450 USD/ZAR 15.4707
Sterling gained 0.3% yesterday, to trade above two-month highs against the greenback amid broad dollar weakness. GBPEUR also rallied to trade just above the key 1.2000 level at time of writing. The pound remains supported as daily Covid cases continue to fall, suggesting the peak has been reached.
Boris Johnson is facing intensifying pressure from his own party, after an e-mail was released yesterday showing an invite to around 100 members of staff to a Garden party at No 10 Downing Street, during last Mays strict lockdown. Reports suggest letters of no confidence have been handed to Graham Brady.EUR
The Euro was little changed on comments from ECB members yesterday morning, where Christine Lagarde confirmed that they are taking inflationary pressures very seriously. Support was echoed by members Villeroy and Kazaks, who cited that the ECB will act when necessary to maintain inflation.
The euro has risen above the 55-day moving average, with higher highs and higher lows developing against the Dollar. EURUSD has gained 0.3% this morning to test the 1.1370 level of resistance.USD
The Dollar lost ground against a basket of currencies yesterday, as Powell confirmed that the Fed is on track to move policy “closer to normal” over the course of the year. The Fed Chair argued that inflationary pressures should ebb on their own as supply chain issues and labour shortages caused by the pandemic ease.
The DXY is down 0.25% since yesterday. Stocks rose and the recent sell-off in Treasuries finally ran out of steam on the comments, the 10-year treasury note dipped 0.02% whilst the Nasdaq and S&P gained 1.4% and 0.9% respectively.ASIA/PACIFIC
Asian stocks rallied on Powell’s comments. The tech-heavy Hang Seng added 2.6% whilst the Shanghai composite gained 0.8% on the prospect of looser monetary conditions. Chinese inflation calmed in December, giving the PBOC scope to cut rates if necessary to support the countries economic downturn.ILS
USDILS is down 0.26% amid ongoing dollar weakness. After a brief breakout of the range yesterday, the pair returns back to the 3.1200 level at time of writing.Data & Events
Euro Area – Industrial Production
US – MBA Mortgage Applications
Trading in financial instruments may involve a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both loss and profit. Investors should carefully consider whether financial instruments suit their needs, financial resources and personal circumstances.
The information contained in this material is solely for informational purposes only and it is not and should not be construed as an offer or a solicitation of an offer to buy or sell any financial instruments and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated prices. This material does not contrue advice.
For more analysis on FX markets or information regarding SVB's FX services:
0800 023 1440 from within the UK
+44 207 367 7880 from overseas
See all of SVB's latest FX information and commentary.
© 2022 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal Reserve System and Silicon Valley Bank is a member of the FDIC.
Your eligible deposits with Silicon Valley Bank UK are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit http://www.fscs.org.uk. For more detailed information about coverage and limits, please review our FSCS Information Sheet at http://www.fscs.org.uk.
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, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.