FX Commentary - October 30, 2017
Central bank decisions last week out of the EU and Canada drove volatility in FX markets which saw the euro and Canadian dollar reach 3 month lows against the US dollar. This week central banks are again in focus as the Federal Reserve, Bank of England, and Bank of Japan each make their respective policy announcements.
The Bank of Canada (BoC) and the European Central Bank (ECB) both proved too dovish for investors, inciting a sell-off in both currencies. The BoC left its rates unchanged as widely expected, but stated it would be cautious in making future adjustments to monetary policy. The bank cited high levels of household debt and NAFTA renegotiations as potential risks to the economy. Statistics on GDP, labor, and trade will be released for Canada throughout the week.
The ECB announced a reduction in asset purchases to EUR 30bn from EUR 60bn through the next 9 months while keeping rates unchanged. However, the bank did not set a clear termination date for its asset purchases although strongly hinted that the program should run until September 2018. Furthermore, the central bank indicated that it still sees interest rates remaining at low levels well past the horizon of asset purchases. This would suggest the bank still believes an accommodative monetary policy is necessary given economic conditions and the path of inflation. Eurozone growth and inflation released this Tuesday should help speak to those factors.
This Wednesday the Federal Reserve conducts its last meeting prior to December’s, when the Fed is heavily anticipated to make its final rate hike for the year. As such, this meeting is not expected to hold many surprises and there will be no accompanying press conference. Rather, markets will direct their focus on the line of succession at the Fed. Current indications show Trump leaning towards Federal Reserve Governor, Jerome Powell, but Stanford economist, John Taylor is also in the running. Taylor is seen as the more hawkish of the two but given the fact that Powell represents continuity at the Fed it is probable markets will react well to any conclusive nomination between the candidates. Beyond the Fed race the US will see data released on inflation, personal income/spending, and employment. GDP growth last Friday measured a strong 3% demonstrating the economy’s resilience following the hurricanes, so expect to see some optimism carried over into next week’s reports.
For the first time in ten years the Bank of England (BoE) may raise interest rates following its meeting Thursday. A strong GDP print last week left the door open to a rate hike, yet aside from GDP other economic indicators have not all boded well for the UK. Analysts are expecting a rate hike largely as a consequence of Bank’s officials’ signals rather than the economy’s. Should the BoE raise rates, such an action may still not earn the full confidence of markets given economic uncertainties and Brexit difficulties that remain.
With no significant changes to economic conditions in Japan, the Bank of Japan (BoJ) will certainly hold its current rates and QE targets. The bank’s firmly dovish stance has led markets to regard BoJ meetings as “non-events” in recent months although an October 18th speech by Deputy Governor, Hiroshi Nakaso, raised the possibility that the BoJ “would make adjustments to the shape of the yield curve as necessary.” Still, with little inflationary pressure the prospects of any policy normalization remain distant leaving the yen as a preferred funding currency primarily impacted by counter-currency risks.
Sources: Bloomberg, Wall Street Journal, Reuters, Barclays, Bank of America, 4cast
Recent NewsBridge Bank Extends $2MM Credit Facility to Miva, Inc.Bridge Bank Extends Venture Term Loan to Deep Lens, Inc.Bridge Bank Expands Capital Finance Group with New Managing Director Timothy CarstensSan José State University Economic Summit Presented by Bridge Bank Goes VirtualBridge Bank Extends Credit Facility to YES Leasing
Recent InsightsLeaving LIBOR: 4 things to know about changing interest rate benchmarksRegional Intelligence Report Series: California OutlookRegional Intelligence Report Series: South Bay OutlookProtect Your Data: The Cybersecurity WebinarProtect Your Organization Against Data Breaches and Cybercrime Scams
We 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… - 2 weeks 1 day 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. REMINDER: In observance of Independence Day, all Bridge Bank offices will be closed on Friday, July 3.” pic.twitter.com/EFLG0KJ3u5Our Technology Banking Group is pleased to announce that they have recently provided a credit facility to aPriori Technologies, a leading provider of design for manufacturability and cost (#DFM/DTC) solutions. #computersoftware #technology #banking pic.twitter.com/PuTYcnKMttLast chance to join us for what is sure to be one of the most interesting economic discussions in the history of this long-standing event, featuring economist, Dr. Christopher Thornberg & SJ Deputy City Manager, Kim Walesh Register now! #sjsueconsummit event.on24.com/wcc/r/2316585/… - about 3 months 3 weeks ago pic.twitter.com/sqxWOiCvsZThis Memorial Day, we honor and remember those who lost their lives while serving our country. REMINDER: In observance of Memorial Day, our offices will be closed on Monday, May 25. pic.twitter.com/Ae97NsXsDaThere’s still time to join us for what is sure to be one of the most interesting economic discussions in the history of this long-standing event, featuring keynote speaker and noted economist, Dr. Christopher Thornberg. Register today! #sjsueconsummit event.on24.com/wcc/r/2316585/… - about 4 months ago pic.twitter.com/TWo0MiGjijJoin us for what is sure to be one of the most interesting economic discussions in the history of this long-standing event, featuring keynote speaker and noted economist, Dr. Christopher Thornberg. Register today! #sjsueconsummit event.on24.com/wcc/r/2316585/… - about 4 months 2 days 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 4 months 1 week 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 5 months 7 days 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 5 months 2 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 5 months 2 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 5 months 3 weeks 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. Allurion Technologies is a #medicaldevice company and creator of the Elipse™ Balloon, a breakthrough product in weight-loss technology. pic.twitter.com/OS96djwOA8Our Life Sciences Group welcomes Derek Scalf. Also, find out how to meet with our entire team during #JPM2020 westernalliancebancorporation.com/bridge-bank-ho… - about 8 months 2 weeks agoWe wish you peace, joy, and prosperity in the new year! #happynewyear2020 NOTICE: All Bridge Bank offices will be closed on Wednesday, January 1st in observance of New Year's Day. pic.twitter.com/B8efpD0GlQREMINDER: In observance of Christmas Day, all Bridge Bank offices will be closed beginning at 3 pm on Christmas Eve and remain closed through Christmas Day. pic.twitter.com/TIP2gGLliHOur Southern California Capital Finance Group is proud to announce their most recent relationship with H Code Media, Inc., the leading technology platform offering a full suite of integrated marketing and media solutions for the U.S. Hispanic market. pic.twitter.com/n9NyyS7odbBridge Bank extends $4MM credit facility to H Code Media, Inc., the leading technology platform offering a full suite of integrated marketing and media solutions for the U.S. Hispanic market. westernalliancebancorporation.com/bridge-bank-ho… - about 9 months 6 days agoWe honor all of the men and women who have served. Thank you. #VeteransDay pic.twitter.com/EpGp17Q39kThankfully #technology works its magic on our electronic devices. We wish you the best of luck changing the clock on your microwave! #daylightsavings pic.twitter.com/9VVKbEyeYgOur Technology Banking Group is proud to announce their most recent deal with Zipari, a growth-stage #technologycompany that offers the first and only consumer experience platform built specifically for #healthinsurance. pic.twitter.com/ImSLIn2TW5Bridge Bank Extends $10MM Growth Capital Term Loan to Zipari prnewswire.com/news-releases/… - about 10 months 3 weeks agoWe wish everyone a fun and relaxing #LaborDay holiday weekend. REMINDER: In observance of Labor Day, all Bridge Bank offices will be closed on Monday, September 2nd. pic.twitter.com/OscfoI61Q4Our Life Sciences group is pleased to announce that Innovative Health has upsized their credit facility to $9MM. Innovative Health is committed to helping #healthcare realize the potential of medical device #reprocessing, enabling hospitals to provide better care through savings. pic.twitter.com/bMFiLdLyyMHappy birthday, #America! Your friends at Bridge Bank wish everyone a safe and joyous celebration. REMINDER: In observance of #IndependenceDay2019, our offices will be closed on Thursday, July 4. pic.twitter.com/twQjmCVei1We would like to congratulate our client, @KIXEYE , on their recent acquisition by Stillfront. Kixeye is a leading gaming developer that makes games for gamers by gamers. Their hit titles include Battle Pirates, War Commander, and VEGA Conflict. pic.twitter.com/9RpoQ7zL13This Memorial Day, we honor and remember those who lost their lives while serving our country. REMINDER: In observance of Memorial Day, our offices will be closed on Monday, May 27. pic.twitter.com/QNA7r5hpv4We are beaming with pride in recognizing this amazing accomplishment of our client, Jessie Wooley-Wilson, CEO of @DreamBox_Learn. Congratulations, @jessieww, on winning the Big Tech CEO of the Year Award at the 2019 GeekWire Awards! #DreamBox youtu.be/WRHuuyPSAfg - about 1 year 4 months agoOur Technology banking group is pleased to announce their latest banking relationship with Touch of Modern, the leading e-commerce app for men to discover cutting edge products, and named one of the 500 fastest growing companies in America by the Inc. 5000 two years in a row. pic.twitter.com/4HfbJVYJaZOur technology banking group is pleased to announce their latest client relationship with @humanyze, a company that has used breakthroughs in #datascience, #AI, and #machinelearning and built organizational metrics and an analytics software platform for global 1000 companies. pic.twitter.com/zayjjFTcX3