Foreign Exchange Market Update
August 14, 2018
Indicative Interbank spot sell rates only as of 9:00 AM PST.
PLEASE CALL THE FX DEPARTMENT AT (626) 279-3235 FOR THE MOST CURRENT RATE
USD/CNY 6.8809 (onshore)
United States (US): Import/Export Price
US import prices were unchanged in July while export prices fell by 0.5% in July. Import prices for fuel surged up by 1.6% but offset by 0.3% fall for non-fuel imports. Export prices decline was driven by a drop in agricultural export prices, which plunged by 5.3% in July. A 14.1% slump in soybean prices was the primary contributor to the drop in agricultural prices, which was the largest monthly decline since October of 2011.
European Union: GDP, Industrial Production
Euro traded at 1.1345 against USD at 2:00 pm PST.
EUR continued fall over 0.5% despite Turkish Lira rebound 5% as European banks are on the hook for EUR 175 billion loans to Turkish borrowers. The possibility that a wave of defaults in Turkey could spill over and impact European financial institutions has become very real.
EU GDP grew 0.4% QoQ in Q2, faster than expected of 0.3%. On a yearly basis, GDP growth eased to 2.2% in Q2 from 2.5 in Q1. Industrial production dropped 0.7% MoM in June, reversing 1.4% rise in May, more than expected of 0.4% drop. On a yearly basis, industrial production growth slowed to 2.5% in June from 2.6%.
Germany: CPI, GDP
Germany economic growth accelerated in Q2 despite global trade tensions. GDP increased 0.5% QoQ in Q2 from 0.4% in Q1. On an annual basis, Q2 GDP was up 2.3% from 1.4% in Q1. Inflation fell slightly to 2.0% YoY in July from 2.1% in June. July’s inflation was largely driven by 6.6% increase in energy, 2.6% on food prices. Core inflation was measured t 1.6%.
France inflation rose 2.3% YoY in July from 2.0% in June, as expected.
United Kingdom (UK): Unemployment Rate
British Pound traded at 1.2723 against USD at 2:00 pm PST.
UK’s employment rate fell unexpectedly to a new 43-year low at 4.0% in Q2, beating forecast of holding steady at 4.2%. The figures painted a familiar picture of tightness in Britain’s labor market, including record high job vacancies and failing to translate into strong wage growth, which is one of the key factors for rate decision. Excluding bonuses, pay growth held steady at 2.7%, well below the 4% rate typical before the financial crisis a decade ago.
Japan: Industrial Production
Japanese Yen traded at 111.13 per USD at 2:00 pm PST.
Japan’s industrial production decreased 1.8% MoM in June, faster than 0.2% decrease in May. On a yearly basis, industrial production slid 0.9% in June, reversing a 4.2% rise in May.
China: Industrial Production, Retail Sales
Onshore Chinese yuan traded at 6.8809 per USD at 2:00 pm PST and offshore Chinese yuan traded at 6.8933 per USD.
China's industrial production growth held steady at 6% annually in July, lower than expected of 6.3%. Retail sales grew at a slower pace of 8.8% YoY in July from 9% increase in June, lower than forecast of 9.1%. In July, China's State Council decided to take more "proactive" fiscal steps to help the economy grow in a reasonable pace amid external uncertainties, but to avoid a strong stimulus. The IMF had urged Chinese authorities to “stay the course” and not to loosen credit if growth falls below target.
Mexico: Turkish Lira Rebound
Mexican Peso traded at 18.8655 per USD at 2:00 pm PST.
MXN rebounded 0.5% as Turkish Lira took a breather and reversed 5% loss from sell off. Turkish government had taken steps to ensure continuous market liquidity, but emerging market risk remains.
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.