Foreign Exchange Market Update
April 29, 2016
Indicative Interbank spot sell rates only as of 9:00 AM PST.
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United States (US) Manufacturing activity in the Chicago region expanded slightly in April to 50.4%, lower than market expectations. The weighted score for the regional surveys is in favor of slightly weaker activity, suggesting a modest decline to 51% is possible for ISM Manufacturing, modestly lower than the current market consensus of a decline to 51.5%. Meanwhile, the Core PCE Index rose by 0.1% and is now 1.6% above its year ago level. Core consumer inflation had been on a slowing trend until October 2015 but is now rising modestly. Consumer Sentiment was revised down by 0.7 points in late April to 89.0%, compared with market expectations for a smaller increase to 90.0%. Sentiment has deteriorated by -3.0 points over the past 3 months. With this month's slight decline, compared to March's final level of 91.0%, sentiment is now 7.2% BELOW its year ago level. Personal Income rose by 0.4% in March, compared with market expectations for an increase of 0.3%. The prior month was revised lower from 0.2% to 0.1%. Personal Income is now 4.2% above its year ago level. Wages and Salaries rose by 0.4%. Both private payrolls and government wages and salaries increased modestly. Wages are now 4.7% above year ago levels. Disposable Income rose by 0.4% and is now 4.0% above its year ago level.
Australia’s dollar traded at 76.03 U.S. cents at 1:08 AM PST and New Zealand dollar traded at 69.84 U.S. cents. Final demand producer prices in Australia decreased in the three months ended March. The producer price index dropped 0.2% quarter-on-quarter in the first quarter, in contrast to a 0.3% rise in the preceding quarter. It was the first decline since the third quarter of 2014. On an annual basis, producer prices grew at a slower pace of 1.2% in the March quarter, following a 1.9% climb in the previous three-month period. Private sector credit rose a seasonally adjusted 0.4% month-over-month in March, following a 0.6% spike in the prior month. On a yearly basis, credit advanced 6.4 percent in March, faster than the 6.2% hike a month earlier. As for New Zealand, the total number of building permits issued decreased notably in March, after rising in the previous month. The number of new dwellings consented fell a seasonally adjusted 9.8% monthly in March, in contrast to a 10.0% sharp increase in February. Also the activity outlook also strengthened, with the corresponding index rising to 32.1 in April 29.4 in March. And the business confidence index rose to 6.2 in April from 3.2 in the previous month.
Euro traded at 1.1452 against USD at 1:08 am PST. The 19-nation eurozone grew at its fastest pace in a year in the first quarter of 2016, as the gross domestic product growth in the three-month period beat forecasts and came in at 0.6%, compared with the 0.3% in previous quarter. On a year-over-year basis, GDP rose by 1.6%— the same rate as the first quarter of 2015. France, which grew 0.3% in the three-month period between October and December, registered GDP growth of 0.5% in Q1 2016, while in Spain, the figure held steady at 0.8%. The eurozone unemployment rate also fell to its lowest level since August 2011 in March, driven by a strong labor market in Germany. The unemployment rate dropped to 10.2%, down from 10.4%in the previous month and 11.2% in March 2015. Across the wider European Union, unemployment rate dropped to a seven-year low of 8.8%, down from 8.9% in February and 9.7% in March 2015.
British Pound exchange rate is 1.4612 against USD at 1:08 am PST. Bank of England data showed that British mortgage approvals fell for the first time in six months in March to a 3-month low. Mortgage approvals for house purchases fell to 71,357 in March, down from 73,195 in February. Analysts in a Reuters poll had forecast 74,500 mortgage approvals were made in March.
Onshore Chinese yuan traded at 6.4720 per USD at 1:08 am PST and offshore Chinese yuan traded at 6.4859 per USD. People’s Bank of China said it will expand a pilot program of cross-border financing management to be available nationwide, allowing companies and financial institutions to sell foreign-currency debt without pre-approval from regulators. The so-called macro prudential management will help the PBOC to better safeguard the financial system by controlling leverage and mitigating currency mismatches, according to the statement on the central bank’s website. China manufacturing, non-manufacturing data will be coming out tomorrow 4/30/2016.
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.