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Foreign Exchange Market Update

October 13, 2015

Indicative Interbank spot sell rates only as of 9:30 AM PST.



The dollar held steady near one-month lows against the other major currencies on Tuesday. The greenback remained under pressure after the minutes from the Federal Reserve's September policy meeting, published last week, reinforced expectations that U.S. interest rates will remain on hold until well into 2016. The dollar fell to a seven-week low as a rebound in commodity prices spurred gains by the currencies of resource-exporting nations, including Australia and New Zealand. The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady at 94.84, the lowest level since September 18.
Australia’s dollar tumbled 1.1 percent to 72.82 U.S. cents at Oct 13, 2015 1:17 pm ET, after strengthening 5.4 percent during the previous nine days in the longest winning streak since March 2009. The Australian dollar was the most vulnerable to reversal at any time in the past 18 months on Monday. New Zealand’s currency dropped 0.6 percent to 66.76 U.S. cents today after surging 6.2 percent from Sept. 28 through Monday.
Euro was 1.1389 per U.S. dollar at 9:34 AM PST with no help from today’s Euro-zone inflation which remained at 0%. The Euro was little changed versus the US Dollar after today’s Euro-Zone ZEW Survey. This week's Eurozone economic reports including tomorrow's German ZEW should highlight the ongoing challenges in the region's economy.

The pound depreciated 0.9 percent to 74.63 pence per euro as of 4:28 p.m. London time and touched 74.93 pence, the weakest level since Feb. 5. Sterling dropped 0.7 percent to $1.5246, its biggest decline since Sept. 23. The pound weakened the most in three weeks against the dollar and Europe’s single currency. Inflation in Britain turned negative for only the second time since 1960, reducing the prospect of an interest-rate increase from the Bank of England which has spurred sterling higher versus most of its major peers this year. U.K. consumer prices fell an annual 0.1 percent after stagnating in August.

Swiss Franc was 0.9581 per U.S. dollar at 9:34 AM PST. With no major economic releases in Switzerland today, we look forward to the release of the nation’s ZEW economic survey data, scheduled tomorrow for further cues.

The franc and the yen climbed versus most of their 16 major peers as China’s customs administration said imports slumped for an 11th month in September, sliding 17.7 percent in yuan terms from a year earlier. Exports fell 1.1 percent, compared with a 6.1 percent decline the previous month.
Canadian Dollar was 1.2983 per U.S. dollar at 9:34 AM PST. With no U.S. or Canadian economic reports released today, the currency pair traded purely on oil. The price of crude oil settled above 50 Dollars a barrel last week and ensured the Canadian Dollar was able to hit stronger levels against the Pound and US Dollar.

The onshore yuan weakened 0.31 percent, the most since Aug. 12, to close at 6.3429 a dollar in Shanghai. It broke an eight-day, 1 percent strengthening run. In Hong Kong’s offshore market, the currency lost 0.39 percent to 6.3417 as of 4:46 p.m. local time. The People’s Bank of China raised the onshore fixing by 0.28 percent, the most since November 2014, to 6.3231. China’s yuan shrugged off a stronger central bank fixing to drop the most in nine weeks as data showing an 11th monthly decline in imports spurred concern about growth in the world’s second-largest economy. Inbound shipments contracted the most since May and exports fell for the third straight month, complicating Premier Li Keqiang’s efforts to prop up the yuan before the International Monetary Fund reviews China’s efforts to obtain global reserve status for its currency. China’s imports contracted 17.7 percent in yuan terms in September, after a 14.3 percent decrease originally reported in August. Overseas shipments fell 1.1 percent, the customs administration said Tuesday, compared with a 6.1 percent decline in August. The trade surplus was 376.2 billion yuan ($59.4 billion).
The Singapore dollar was at S$1.4021 at 3:49 p.m. in Singapore on Tuesday after depreciating to S$1.4366 on Oct. 2, the weakest level since September 2009. Singapore’s export-dependent economy has been hurt by slowing growth in China, while uneven recoveries in the U.S. and Europe have damped demand for Asian goods.

Mexican peso dropped 1 percent to 16.6252 per dollar as of 2:23 p.m. in New York on Tuesday. Banco de Mexico sold $200 million in a supplementary auction as part of its support program for the peso.

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.





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