Foreign Exchange Market Update
July 20, 2017
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
United States (US) US weekly jobless claims total 233,000 vs 245,000 estimate. The number of Americans filing for benefits fell more than expected. Claims were at the lowest level in nearly five months, suggesting another month of strong job growth. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,250 to 243,750 last week.
Euro traded at 1.1629 against USD at 11:08 am PST. The EUR, currently at over $1.15 (note that it started 2017 at $1.05) is not far from its 2½-year high as markets await the ECB announcement (7:45 am ET) and, more importantly, the press conference (8:30 am). No changes to monetary policy (refi rate at 0.0%, deposit facility at -0.4%, marginal lending facility at 0.25%) are expected. Given that the ECB has yet to see a “sustained adjustment in the path of inflation consistent with its inflation aim”, expect confirmation that net asset purchases will continue to run until the end of December 2017.
Japanese Yen traded at 111.86 per USD at 11:08 am PST. BoJ wrapped up its monetary policy meeting and left almost everything unchanged. Almost. Overnight rates will stay at -0.1%, 10-year JGB yields will remain around 0%, and bond holdings will be bought at a pace of ¥80 trillion a year. The economy was “moderately expanding”, consumption had “increased its resilience”, and the upcoming Olympic Games are spurring investment. But there was a new development the estimated timeline to hit the Bank’s 2% inflation target was delayed once again.
Canadian dollar traded at 1.2572 per USD at 11:08 am PST. Nominal home prices in Canada have grown by 13% over the past year, and by 200% since 2000. Most Canadian mortgages have 25-year amortization schedules but 5-year terms, and so borrowers typically have to re-qualify for new mortgages every 5 years.
Onshore Chinese yuan traded at 6.7570 per USD at 11:08 am PST and offshore Chinese yuan traded at 6.7533 per USD. China’s macro data surprised on the upside. Q2-2017 GDP growth came in at 6.9% y/y, beating market expectations of 6.8%. Strikingly, industrial production (IP) growth accelerated to 7.6% y/y in June from 6.5% in May, likely benefiting from strong external and domestic demand, as seen in the recent strong trade data.
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.