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Foreign Exchange Market Update

February 20, 2019


United States (U.S.): FOMC Meeting
 
Fed Chairman Powell mentioned that the central bank would be assessing risks before making decision on whether or not to continue hiking short-term interest rates. The Fed stated in its January statement that the labor market has continued to strengthen, and that economic activity has been rising at a solid rate. The Fed currently has about $4 trillion in bonds on its balance sheet, and according to the January meeting minutes, almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year.
 
Australia/ New Zealand: Australia Wage Prices Gained 0.5% On Quarter in Q4, New Zealand’s PPI
Australian dollar traded at 0.7176 and New Zealand dollar traded at 0.6874 against USD at 9:00 am PST
 
Wage prices in Australia were adjusted 0.5% QoQ in the fourth quarter of 2018. That was shy of expectations for an increase of 0.6%, which would have been unchanged. Wage prices advanced 2.3% YoY, unchanged and matching forecasts.
 
New Zealand’s quarterly PPI input rose 1.6%, better than the 1.0% forecast. This was the highest quarterly rise since Q3 2015. PPI output came in at 0.8%, below the 1.1% forecast.
 
European Union: LTRO, Germany’s PPI 
Euro traded at 1.1365 against USD at 9:00 am PST.
 
ECB’s chief economist Praet suggested that a new round of Targeted Long-Term Refinancing Operation (LTRO) will be discussed as soon as the meeting in March. The new long-term funding would offer an insurance policy to banks, which had been hurt by recent slowdown and began to feed through to businesses.
 
Germany's PPI eased for a second straight month to its lowest level in eight months in January. The PPI rose 2.6% YoY in January, following a 2.7% in December.
 
United Kingdom (UK): CBI Trends
British Pound traded at 1.3081 against USD at 9:00 am PST
 
The Confederation of British Industry has stepped up its campaign for the UK and the EU to strike a compromise Brexit deal after its latest snapshot of manufacturing showed the pace of output growth slowing. The CBI’s monthly industrial trends survey showed manufacturing was in recession during the second half of 2018, suffering two successive quarters of negative growth.
 
Japan: Trade Deficit in January
Japanese Yen traded at 110.72 per USD at 9:00 am PST.
 
Japan had a merchandise trade deficit of JPY 1,452.2 billion in January. Exports were down 8.4% YoY to JPY 5.574 trillion, shy of forecasts for a fall of 5.7% after dropping 3.9% in the previous month. Imports eased an annual 0.6% to JPY 6.989 trillion versus expectations for a decline of 3.5% after rising 1.9% a month earlier.
 
China: CNY Had Been Lifted
Onshore Chinese yuan traded at 6.7180 per USD at 9:00 am PST and offshore Chinese yuan traded at 6.7118 per USD.
 
The yuan had been lifted after the United States is pressing to secure a pledge from China that it will not devalue its yuan as a part of a trade deal. President Trump told reporters the U.S.-China trade talks are "going very well" and once again hinted that an early March deadline to reach a deal could be postponed.




PLEASE CALL THE FX DEPARTMENT AT (626) 279-3235 FOR THE MOST CURRENT RATE
  
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 situations or needs of any recipient. Cathay Bank does not make any representations or warranties about the accuracy, completeness or adequacy of this market update.

 

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