July 2, 2015
Indicative Interbank spot sell rates only as of 8:30 AM PST.
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The U.S. dollar fell from a three-week high after a report showed U.S. wage growth stalled in June, disappointing but not disillusioning traders looking for an interest-rate increase this year. After rallying for much of the past 12 months, the greenback has seesawed in recent weeks as policy makers pledge a slow and steady path to increasing borrowing costs amid patchy economic growth. The dollar weakened for the first time in three days against the euro after the jobs release showed labor-force participation fell to the lowest since October 1977, while hiring trailed forecasts. The currency is still on track for a weekly gain. The U.S. Dollar Spot Index, which tracks the U.S. currency against 10 of its major peers, declined 0.3 percent to 1,186.07 as of 10:37 a.m. in New York. It is up 0.5 percent this week.
Greece’s woes continued to weigh on the euro as German Chancellor Angela Merkel refused to engage with negotiations on any revised deal until after the nation’s July 5 referendum. Greek Prime Minister Alexis Tsipras earlier said he accepted creditors reform proposals as the basis of a compromise. He’s encouraging a no vote in the referendum, saying this will help get a better deal. The euro is down 4.5 percent this year among 10 developed-nation currencies.
New Zealand’s dollar tumbled to a five-year low and headed for its longest stretch of weekly declines on record as falling milk prices amplified speculation the nation’s central bank will cut interest rates this month. The kiwi slid against all of its 16 major peers Thursday after the average price of whole milk powder fell at auction. The Reserve Bank of New Zealand cited “weaker prospects for dairy prices” as a headwind to economic growth when it cut interest rates in June. U.S. farmers are tipping some of their milk into manure pits because they can’t find buyers with global output climbing to unprecedented highs. The kiwi fell 0.8 percent to 66.79 U.S. cents as of 6:41 a.m. New York time, and touched 66.71 cents, its lowest level since June 2010. It’s headed for an 11th-straight weekly decline, the longest losing streak since it was freely floated in 1985.
The Japanese yen weakened to 125.86 per dollar on June 5 and has dropped 2.9 percent this year amid prospects the Federal Reserve in moving toward raising interest rates while the Bank of Japan sticks to record monetary easing. Japan’s currency surged to 121.94 on June 30, the strongest in a month, on concern would Greece will miss debt payments, only for the currency to decline beyond 123-level two days later.
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.