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Foreign Exchange Market Update

September 1, 2015

Indicative Interbank spot sell rates only as of 8:30 AM PST.

PLEASE CALL THE FX DEPARTMENT AT (626) 279-3235 FOR THE MOST CURRENT RATE

AUD/USD----0.7062
NZD/USD----0.6370
EUR/USD----1.1276
GBP/USD----1.5357
USD/CHF----0.9612
USD/JPY----119.79
USD/CAD----1.3159
USD/TWD----32.346
USD/CNY----6.3640 (onshore)
USD/HKD----7.7479
USD/SGD----1.4102
USD/MXN----16.8395
 
The gap between U.S. and euro-area two-year swap rates narrowed two basis points to 77 as of 9:23 a.m. New York time, contributing to a 0.5 percent decline in the U.S. dollar to $1.1272 per Euro. The U.S. currency is increasingly moving in tandem with the difference between U.S. dollar and Euro based interest rates. Interest-rate differences were signaling a stronger U.S. dollar until about three weeks ago when China unexpectedly devalued the China yuan. When European Central Bank policy makers meet on September 3, they’ll deliberate about whether a bigger quantitative-easing program is needed as risks to economic growth threaten their inflation goal. A day later, the Labor Department’s August payroll report will provide Fed officials with the most important data available to them before the September 16-17 meeting.
 
British pound erased gains and was little changed at $1.5341 as of 10:11 a.m. in London, after increasing as much as 0.4 percent before the release. U.K. manufacturing growth cooled in August as export orders fell for a fifth month. In its monthly factory report published in London said companies blamed the decline in foreign demand on the strong pound, weak sales in the euro area and China’s economic slowdown. The headline manufacturing index slipped to 51.5 from 51.9 in July. A reading above 50 indicates growth.
 
Australian dollar dropped as much as 1.1 percent to 70.37 U.S. cents. The currency plunged to a six-year low as a decline in China’s official factory gauge eroded the outlook for commodities demand. The Australian dollar declined before the Reserve Bank of Australia decides policy later Tuesday. The Reserve Bank of Australia refrained last month from indicating the currency was overvalued for the first time in more than a year as policy makers held the benchmark interest rate at a record-low 2 percent. Australia’s dollar dropped last week by the most since May as a stock rout in China increased concerns about growth. The currency has tumbled more than 2 U.S. cents since the last meeting, cushioning the impact of lower commodity prices.
 
Canada’s dollar was little changed at C$1.3145 per U.S. dollar at 9:09 a.m. Toronto time. The currency is down about 12 percent this year. Canada’s economy shrank again in the second quarter as businesses continued to scale back investments amid plunging oil prices. Gross domestic product declined at a 0.5 percent annualized pace from April to June. Canada’s economy got a boost in the second quarter from international trade and continued support from consumer spending. Household consumption growth quickened to 2.3 percent from 0.5 percent in the first quarter, led by automobiles. Exports rose for the first time in three quarters with a 0.4 percent gain, while imports fell by 1.5 percent. Business investment fell by 7.9 percent in the second quarter after a 10.9 percent decline in the prior three months, partly because of a drop in mineral exploration. GDP was also curbed as companies slowed their investment in inventories to C$7.1 billion from C$12 billion
 
Japanese yen strengthened 1.2 percent to 119.78 per U.S. dollar as of 9:12 a.m. New York time. The Japanese yen surged the most in more than a week as Chinese stocks extended their slump, boosting demand for haven assets. Japan’s currency rose as Asian and European shares weakened for a second day, after a gauge of manufacturing in China fell to a three-year low.
 
The People’s Bank of China raised the daily fixing by 0.22 percent to 6.3752 per U.S. dollar. The Shanghai Composite Index closed near its highest level of the day on Monday for the third straight session on prospects state-backed funds are using afternoon share purchases to bolster the market before Thursday’s parade. The benchmark measure of stocks dropped on Tuesday after an official factory gauge slumped to a three-year low, taking its decline from a June peak to 39 percent. China yuan climbed for a fifth day, closing 0.19 percent stronger at 6.3645 versus the U.S. dollar in Shanghai. The onshore spot rate, which can trade a maximum 2 percent on either side of the People’s Bank of China’s daily fixing, has advanced 0.75 percent in the past five days. The freely-traded offshore rate in Hong Kong rose 0.42 percent to 6.4189 as of 4:32 p.m.


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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