April 28, 2016
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United States (US) Jobless Claims rose by 9k during the week ended April 23rd to 257k, compared with market expectations for an increase to 259k. The prior week estimate was revised slightly higher to 248k. Initial claims have been on a declining trend over the past 6 years but the pace of decline has now slowed. Continuing Claims fell by 5k during the week ended April 16th to 2,130k, after the prior week was revised slightly lower to 2135k. Continuing claims have also been on a declining trend for more than 5 years. Gross Domestic Product rose by 0.5% in Q1, lower than market expectations for an increase of 0.7%. This was the smallest quarterly increase in economic activity since Q1-2014. The GDP Price Index rose by 0.7%, compared with market expectations of 0.5%. This is now 1.3% above its year ago level. Consumer confidence rebounded last week as Americans felt more comfortable about their finances and considered it the best time to buy goods and services in two months. The weekly Bloomberg Consumer Comfort Index advanced to 43.4 in the period ended April 24 from 42.9. The improvement left the gauge close to the 2016 average of 43.8. The comfort measure has held in a 2-point range since the start of this year, the longest such streak since 2003.
Australia’s dollar traded at 76.41 U.S. cents at 11:28 AM PST and New Zealand dollar traded at 69.75 U.S. cents. Australia's import prices decreased at a faster-than-expected pace in the three months ended March. The import price index fell 3.0% over the quarter, following a 0.3% slight drop in the December quarter. It was the second consecutive quarterly decrease. Data also showed that export prices slipped 4.7% quarterly in the first quarter, exceeding economists' expectations for a 1.5% decline. New Zealand’s central bank said it may need to cut interest rates further after holding them steady Thursday, as slowing global economic growth and a strong currency prolong a period of low inflation. “Further policy easing may be required to ensure that future average inflation settles near the middle of the target range,” Reserve Bank of New Zealand Governor Graeme Wheeler said in Wellington after keeping the official cash rate at 2.25%, a record low. The New Zealand dollar surged as some market participants had expected the central bank to cut rates today. “A lower New Zealand dollar is desirable to boost tradables inflation and assist the tradables sector.” Fed policy makers left open the door to raising interest rates in June, according to a statement three hours before the RBNZ decision. Wheeler said while the New Zealand economy is being supported by high immigration, construction and tourism, the outlook for global growth has deteriorated and commodity prices remain weak. There are also risks from falling inflation expectations and housing market pressures, he said.
Euro traded at 1.1344 against USD at 11:29 am PST. Germany kept unemployment at historic lows in April as the recovery in Europe's biggest economy remains on track. The unemployment rate stood at 6.2% in April, unchanged from March. In numerical terms, the number of people registered as unemployed in Germany declined by 16,000. Germany Consumer Price Index for April showed growth of 0.1% on an annualized basis. From March to April CPI fell 0.2% following the jump higher of 0.8% from February to March.
British Pound exchange rate is 1.4613 against USD at 11:29 am PST. UK house price growth slowed in April, following the surge of buying in March. The annual pace of house price growth slowed to 4.9% in April, compared with 5.7% in the previous month. In April alone, house prices rose by just 0.2%, the lowest monthly increase since last November. Royal Institution of Chartered Surveyors (Rics) - concluded that international investors have been put off by the possibility of the UK's exit from the European Union.
Japanese Yen traded at 108.13 per USD at 11:29 am PST. Japan’s seasonally adjusted unemployment rate fell to 3.2% in March. The jobs-applicants ratio rose to 1.30 in March, median estimate was for the ratio to remain unchanged from the previous two months at 1.28. Retail sales fell 1.1% year-over-year in March, slower than the 1.4% decrease expected by economists. In February, sales had risen 0.4%. Japan's industrial production increased at a faster-than-expected pace in March, after falling sharply in the prior month. Industrial production climbed a seasonally adjusted 3.6% month-over-month in March, surpassing economists' expectations for a 2.8% rise. In February, production had fallen 5.2%. On an annual basis, industrial production edged up 0.1% March, in contrast to a 1.2% fall in the preceding month. Tokyo’s Consumer Price Index (CPI) dropped 0.3% in March on-year, which complicates the Bank of Japan's inflation target of 2%. Core consumer prices, excluding energy costs, showed an increase of 0.6%. Japan’s national consumer price index fell to -0.1% in the 12 months through March, down from 0.3% in February. That was the first time since May 2013 that headline CPI was negative. The Bank of Japan kept its benchmark interest rate unchanged at -0.1% while maintaining both the quantitative and qualitative aspects of its stimulus program. The decision came amid widespread speculation policymakers were considering expanding their set of policies even further in the face of declining inflation and growth. Policymakers added the following on Japan’s economic prospects: “Japan’s economy has continued its moderate recovery trend, although exports and production have been sluggish due mainly to the effects of the slowdown in emerging economies… On the domestic side, business fixed investment has been on a moderate increasing trend as corporate profits have been at high levels. Against the background of steady improvement in the employment and income situation, private consumption has been resilient, although relatively weak developments have been seen in some indicators.” The BOJ shocked the markets in January by venturing into negative-rate territory, joining the European Central Bank in adopting this unconventional measure that effectively penalizes banks for hoarding cash instead of extending loans to businesses or other lenders.
Onshore Chinese yuan traded at 6.4736 per USD at 11:29 am PST and offshore Chinese yuan traded at 6.4839 per USD. China's yuan has dropped to seventh place among the world's payments currencies, global transactions organization SWIFT even as Beijing tries to push greater international use of the unit. The yuan held a 1.81% share in world payments based on value in February, down from 2.06% in January, when it stood in fifth place. It attributed the weaker showing to the "seasonal effect" of the Chinese New Year, when business slows because of a week-long holiday. But the demotion also comes amid mounting worries over China's slowing economy, though officials have denied strong capital outflows.
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.