Foreign Exchange Market Update
March 10, 2014
Indicative Interbank spot sell rates only as of 09:00 AM PST.
PLEASE CALL THE FX DEPARTMENT AT (626) 279-3235 FOR THE MOST CURRENT RATE
U.S. employers added more workers in February than economists projected, the Labor Department said last week, indicating the economy is starting to recover from a weather-induced setback. The 175,000-job increase in employment followed a revised 129,000 gain in January. Improvement in the labor market is one reason the Fed has trimmed monthly bond purchases by $10 billion in each of its past two meetings. The central bank in January reduced monthly bond purchases to $65 billion.
Bank of England Governor Mark Carney will face his toughest public testimony today as he seeks to defend the integrity of an institution that’s become embroiled in the currency-manipulation scandal. Lawmakers will grill Carney tomorrow after the BOE suspended an employee and released minutes of meetings showing officials knew of concerns the foreign-exchange market was being rigged almost eight years ago. The central bank said last week that an internal review has found no evidence so far that staff was involved in collusion. Carney, along with Markets Director Paul Fisher, is due to appear before Parliament’s cross-party Treasury Committee at noon in London to answer questions on the foreign-exchange inquiry and the central bank’s governance. That session will follow hearings at 9:30 a.m. on the BOE’s Inflation Report and at 11 a.m. on currency unions and Scottish independence
European Central Bank Governing Council member Christian Noyer said a strengthening euro creates unwarranted pressure on the euro-area economy. The euro is trading near the highest level since Mario Draghi became ECB president in 2011, when he started a series of rate cuts and unconventional policies to end a debt crisis and save the single currency. The dilemma now is that the euro’s strength, a sign that the worst of the crisis has passed, may yet derail the recovery by curbing the price of imported goods and undermining the competitiveness of producers in the bloc. The euro fell after Noyer’s comments and traded at $1.3881 at 3:15 p.m. Frankfurt time, down from $1.3898. It climbed as high as $1.3915 on March 7, the strongest since October 2011.
The Australian dollar fell for a second day against the U.S. currency after China reported the biggest trade deficit in two years, cooling demand for higher-yielding assets. The Aussie weakened versus most of its 16 major counterparts as stocks declined. The Aussie dropped 0.6 percent to 90.18 U.S. cents at 11:02 a.m. in New York after advancing to 91.33 cents on March 7, the strongest since Dec. 11.
The Canadian dollar was lower Monday morning, buffeted by lower commodity prices and lingering worries about Canada's economic health after disappointing data on Friday.
The Japanese yen appreciated 0.1 percent to 103.17 per dollar. Japan’s currency gained 0.2 percent versus the euro, to 143.11.
China’s exports unexpectedly fell 18.1 percent in February from a year earlier, customs data showed March 8. The Chinese yuan dropped after the central bank lowered its reference rate for the currency by the most in 1 1/2 years. The People’s Bank of China cut the yuan’s reference rate by 0.18 percent, the most since July 2012. The currency declined 0.2 percent to 6.1385 per dollar, according to China Foreign Exchange Trade System prices.
This market update is prepared by Cathay Bank for informational purposes only and does not constitute any form of legal, tax or investment advice, nor should it be considered an assurance or guarantee of future exchange rate movements or trends. This information is provided without regard to the specific objectives, financial situation or needs of any recipient. Cathay Bank does not make any representations or warranties about the accuracy, completeness or adequacy of this market update.