Novedades sobre el Intercambio Extranjero (en Inglés)
March 21, 2017
Indicative Interbank spot sell rates only as of 11:06 AM PST.
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The U.S. dollar index, which measures the dollar's strength against a trade-weighted basket of six major currencies, eased 0.14% to 100.02. The dollar trended weaker in Asia on Tuesday with the Fed squarely in focus as policymaker speeches loom, though an extraordinary day of news about Russian meddling in the presidential election raised political risk. Chicago Fed Evans said the central bank will likely wait until June to decide on the next rate hike in comments made ahead of a slate of Fed policymaker remarks due on Tuesday. New York Fed speaks at 6:35 a.m. in London, while Boston Fed speaks in Bali, Indonesia. Kansas City Fed on the economy at noon and Cleveland Fed speaks at 6 p.m. ET.
British pound climbed to $1.2472, its highest level since Feb. 27, as it filled offers above $1.2400 and stops were triggered near $1.2450. The pound was Tuesday’s best performer versus the dollar after a report showed U.K. inflation beat estimates to rise above the Bank of England’s target for the first time in more than three years. The data showing annual inflation picked up to 2.3 percent in February, versus a median estimate of 2.1 percent, underlined bets by investors that the Bank of England will tighten policy as early as next year. However, banks are keeping a cautious outlook on the currency as U.K. Prime Minister Theresa May is set to trigger Article 50 on March 29 to start the process of the nation’s exit from the European Union.
Euro climbed 0.5 percent to $1.0795, after earlier touching $1.0804. The euro is approaching its strongest level this year, supported by a change in the European Central Bank’s rhetoric, a less hawkish-than-expected Federal Reserve and easing concerns over populist sentiment across the currency bloc. The euro rose to the strongest level in more than a month versus the dollar after two polls showed Emmanuel Macron was the most convincing in last night’s French presidential debate. The average implied probability of far-right presidential candidate Marine Le Pen winning, based on bookmakers’ quotes, has declined this month, prompting euro-bearish bets to be trimmed on perceived tail risks. The shared currency strengthened against most of its Group-of-10 peers as concerns over euro-area political risks continue to abate. The traders noted that unwinding of euro-shorts in the options market and some outright demand for upside exposure on tenors up to two months have also supported the currency.
Canadian dollar is trading at 1.3316 as of 10:10am PST. Canada is preparing to launch a government infrastructure bank to spur development of projects across the country, from roads to subways, by drawing in private capital from pension funds and other institutional investors. To do it, Prime Minister Justin Trudeau will directly subsidize some projects, and agree to take a back-seat stake in others. The Canada Infrastructure Bank will be set up with C$35 billion ($26 billion) from Trudeau’s government. That includes C$20 billion in repayable capital to take stakes in projects, and C$15 billion in non-repayable funding, part of the C$180 billion in total infrastructure spending the government is planning over the next 12 years. The government hopes it can stretch its dollars by attracting private-sector investments. The bank will have a hands-on role in helping cities, provinces and even the federal government come up with financing models for projects, know-how the Trudeau government fears is lacking.
Australian dollar is trading at 0.7716 as of 10:10am PST. Australian dollar's hit a four month high overnight but lost momentum after strong housing data and Reserve Bank of Australia minutes. Reserve Bank of Australia highlighted in the meeting minutes the risks from the heat-up housing markets. It noted that data continued to suggest that there had been a build-up of risks associated with the housing market. Also, growth in household debt had been faster than that in household income. Regarding the job markets, Reserve Bank of Australia said that it was clear that spare capacity remained and there continued to be significant differences in labor market outcomes across the country. Domestic wage pressures remained subdued and household income growth had been low, which, if it were to persist, would have implications for consumption growth and the risks posed by the level of household debt.
New Zealand dollar is trading at 0.7056 as of 10:10am PST. The Reserve Bank of New Zealand will announce their cash rate and release a statement on Wednesday and the latest Global Dairy Trade (GDT) report is scheduled to come out on Tuesday. The New Zealand dollar is the strongest currency among the majors shortly ahead of the North American close while the British pound has lagged. Strength in New Zealand dollar is notable as the currency was persistently weaker than its major counterparts in the first half of the month. Reserve Bank of New Zealand took a more dovish than expected stance in recent communication and at the last central bank meeting. The reserve bank stated that the odds of the next rate decision being a cut or hike are roughly equal which contradicted market expectations of a more neutral stance following a well-communicated easing cycle that ended in late 2016.
Japanese yen is trading at 111.87 as of 10:10am PST. Continuously falling Japanese yen is not a benefit to the Japanese economy, because a weak currency has some negative side effects, Bank of Japan said on Tuesday. Bank of Japan also said the bank is not relying on a weak yen to meet its 2 percent inflation target, in comments before the upper house fiscal and monetary policy committee. The link between monetary policy and currencies has become a sensitive topic in Japan after U.S. President Donald Trump earlier this year said the Bank of Japan is using the money supply to artificially weaken the currency. The Trump administration has since avoided direct criticism of Japan's monetary policy, but there are still lingering worries about his preference for protectionist trade policies. Bank of Japan on Tuesday reiterated the bank’s official view that monetary easing tends to weaken the yen in the short term, but its policy is aimed at narrowing the output gap to encourage price gains. Despite years of easing, Japanese consumer prices are not even close to the bank's 2 percent inflation target, which could invite criticism Japan is trying to keep the yen weak to push up import costs and give its exporters an advantage. The two main tools at the bank's disposal are raising the interest applied to excess commercial bank reserves and selling its government bond holdings, but the bank is unlikely to sell debt anytime soon.
The People's Bank of China set the midpoint rate at 6.9071 per dollar prior to market open, weaker than the previous fix 6.8998. The spot market opened at 6.9060 per dollar and was changing hands at 6.9066 at midday, -24 pips stronger than the previous late session close and -0.01 percent stronger than the midpoint. The offshore yuan was trading 0.16 percent stronger than the onshore spot at 6.8955 per dollar. China's yuan firmed against the U.S. dollar on Tuesday, as the global dollar index lost growth momentum after a Federal Reserve official reinforced perceptions that the U.S. central bank won't accelerate the pace of its interest rate hikes.
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.