FX Commentary - October 16, 2017
Europe averted the worst of fears last week when Catalan President Puigdemont suspended a declaration of independence in an attempt to open dialogue with the Spanish government.5, 6, 7 With the immediate crisis averted the euro found a steady flow of relief buying, helping the common currency rebound from 6 week lows.22 Puigdemont must now clarify his stance to the central government by Monday, but the balance of powers seems to have broadly shifted towards Madrid aided by the support of central EU figures and key Catalan businesses.5, 6, 7 Markets appear to have discounted the worst of the crisis in Spain but a light economic calendar this week means the euro remains heavily exposed to any political surprises, keeping the common currency tentatively in check.
Divorce negotiations between the UK and the EU have made little progress according to the EU’s Chief Brexit Negotiator last Thursday.2 The latest comments come as UK Prime Minister Theresa May faces growing political dissent at home, complicating her proposed transition deadline as well as her tenure in office.3, 4 The suggestions that a no-deal Brexit may yet again be plausible pose a risk to the pound especially as the economic drawbacks of Brexit begin to surface.23 Crucial data on inflation, employment, and consumption are set for release this week, the results of which may guide the Bank of England’s next decision on a rate hike.24
Consumer prices and retail sales out of the US missed estimates last Friday, boding poorly for the troubling inflation outlook.23, 24 Indeed, Fed minutes from the September meeting showed many officials concerned that low inflation “might reflect not only transitory factors.”8 While the dollar sharply dropped on the release, a December hike remains almost certain as implied by the central bank’s cues and market priced odds.25 Less certain has been the future of leadership at the Fed and details of tax reforms promised by the administration. Coupled with President Trump’s latest assaults on Obamacare and the Iran deal, the various unknowns have dollar traders in an anxious spot heading into the week.14, 19 Politics aside, a few fed speeches this week, including one this Friday by Fed Chair Janet Yellen, can act as potential risk drivers for the dollar.24
Canada and Mexico engaged in the fourth round of NAFTA talks with the US last week; the two countries hoping to preserve the framework of the deal against President Trump’s threats. Once the best performing currency of the year, the Mexican peso has now fallen over 5% over the past three weeks as a result of NAFTA troubles and its own upcoming elections.16, 17 As talks progress markets will look forward to Canadian inflation and consumption data due this Friday. Bank of Canada officials have tempered rate expectations in recent weeks warning of a stronger exchange rate and NAFTA uncertainties while the latest inflation and consumption figures proved disappointing.20, 23, 24 Should this Friday’s reports miss, markets should heavily discount the chance of further action by the Bank of Canada this year.
High yielding currencies out of the Asia-Pacific performed well last week, with the Australian dollar, Indian rupee, and Chinese renminbi all appreciating against the dollar.22, 23, 24 The gains break a nearly one month decline for the currencies against the dollar as the ever important driver of economic activity in the region—China—released trade statistics last Thursday showing a still robust demand for imports.16, 21 As such, it appears regional trade remains supportive of Asian currencies for now, likely leading to a continuing drawback of the prior month’s depreciation.22 Meanwhile, USD/JPY failed to push past 113 last week and succumbed to profit taking as the crisis in Europe mediated and global equities rallied.13 Chinese GDP and industrial production released this Wednesday should provide further clarity on the Asian business cycle, with regional FX taking cues from the data.
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We would like to welcome Alex Tsarnas to the Bridge Bank team. Alex will be leading our newly established banking group, Business Escrow Services. Read our press release to learn more. westernalliancebancorporation.com/bridge-bank-ho… - 3 days #mergersacquistions #privateequity #bridgebankIn observance of Presidents' Day, all Bridge Bank offices will be closed on Monday, February 15. #PresidentsDay pic.twitter.com/6eMQQeNJipOur team of asset-based lending professionals is growing! Read more about it here: westernalliancebancorporation.com/bridge-bank-ho… - 2 weeks 1 day ago #assetbasedlending #bridgebankOur Life Sciences Group recently provided a Term Loan to Bolder Surgical, a medical device company focused on commercializing mini-laparoscopic surgical devices aimed at improving and enabling laparoscopic procedures for pediatric patients. #lifesciences #medicaldevices pic.twitter.com/hKgRzmVhaZ“Not everybody can be famous but everybody can be great because greatness is determined by service… You only need a heart full of grace and a soul generated by love.” ~ Dr. Martin Luther King Jr. In observance of MLK Day, all Bridge Bank offices will be closed on Mon. 1/18. #MLK pic.twitter.com/rBAo4INJXBOur Technology Banking group recently provided a growth capital term loan to Funraise, a software company that provides a state-of-the-art fundraising platform, saving nonprofit organizations time and resources spent on data management. pic.twitter.com/StETyssfLeOur #Technology Banking group recently provided a credit facility to @DrinkHealthAde, an organic beverage company. To learn more details, read our press release. westernalliancebancorporation.com/bridge-bank-ho… - about 2 months 3 weeks ago pic.twitter.com/0eWWI16N08Our Technology Banking Group at Bridge Bank recently provided a credit facility to CloudBolt Software, an enterprise leader in cloud management and integration solutions. Visit westernalliancebancorporation.com/bridge-bank-ho… - about 3 months 1 week ago to learn more details. pic.twitter.com/8fzjGbAL6BWe honor all of the veterans who have served our country. Thank you. #HappyVeteransDay REMINDER: In observance of Veterans Day, all Bridge Bank offices will be closed on Wednesday, November 11. pic.twitter.com/IfoGP8ecCAWe would like to welcome Jon Berry to the Bridge Bank team! Jon supports our Technology Banking group and will be based in Austin. Read our press release to learn more. #technology #banking #Austin #Texas westernalliancebancorporation.com/bridge-bank-ho… - about 3 months 2 weeks agoIn observance of Columbus Day, all Bridge Bank offices will be closed on Monday, October 12. pic.twitter.com/BtX52D5RTPWe wish everyone a safe and relaxing #LaborDay holiday weekend. REMINDER: In observance of Labor Day, all Bridge Bank offices will be closed on Monday, September pic.twitter.com/09SIuoO7XGOur Technology Banking Group recently provided MIVA, an #ecommerce #software and service provider, with a credit facility. Read our press release to learn more: westernalliancebancorporation.com/bridge-bank-ho… - about 5 months 3 weeks ago #technologybanking pic.twitter.com/OUj49RdD5VOur Life Sciences Group is pleased to announce an upsized term loan for Fennec Pharmaceuticals, a pharmaceutical company focused on the development of PEDMARK™ (a unique formulation of Sodium Thiosulfate) for the prevention of ototoxicity from cisplatin in pediatric patients. pic.twitter.com/zrH2JslA27Stay safe as you celebrate #IndependenceDay. 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Register today! #sjsueconsummit event.on24.com/wcc/r/2316585/… - about 9 months 1 week ago pic.twitter.com/pdtYAF2XrDBridge Bank’s #LifeSciences Group is proud to partner with iCAD, a global #medical #technology leader providing #innovative cancer detection and therapy solutions. bridgebank.com/lifesciences - about 9 months 3 weeks ago pic.twitter.com/oPIrnYlOTjCongratulations, @ArcturusRx on your big announcement and the accomplishments you and your team are achieving as you work on a vaccine for COVID-19. #COVID19 #coronavirus #vaccines #LifeSciences ir.arcturusrx.com/news-releases/… - about 10 months 2 weeks agoOur #LifeSciences team is proud to provide Valencell, a company that transforms the science of wearable #biometrics to enable impactful #health outcomes, with the creative #bankingsolutions they needed. pic.twitter.com/XCmNJpaVuvOrganizations of any size are at risk of data breaches or other types of #cybercrime, but you can defend yourself against #fraud by knowing the dangers and implementing best practices whether you’re #WFH or the office. #fraudawareness #cybersecurity westernalliancebancorporation.com/bridge-bank-ho… - about 10 months 3 weeks ago pic.twitter.com/bzKAaLYRGPLearn more about the several key initiatives we’re focused on right now. #WeAreInThisTogether #covid19 #CoronaVirus westernalliancebancorporation.com/~/media/pdfs/b… - about 10 months 4 weeks ago pic.twitter.com/ssOjI7DGnXCybercriminals are using concerns about COVID-19 to perpetrate scams – learn how to defend your organization against these scams and best practices to keep your business safe. #fraudawareness #cybersecurity #fraud #cybercrime #fraudprevention #WFH westernalliancebancorporation.com/bridge-bank-ho… - about 11 months 2 days ago pic.twitter.com/kZo07GPhVvBridge Bank is a proud sponsor of #FVCC2020, Florida’s largest statewide #VentureCapital Conference. pic.twitter.com/9l2lOPceVROur #LifeSciences Group helped @alluriontech create a customized #financialsolution to support their rapid growth. 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