October 14, 2016
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United States (US) Consumer Sentiment fell by 3.3 points in early October to 87.9%, compared with market expectations for an increase to 91.8%. With this month's modest decline, sentiment is now 2.3% below its year ago level. Retail Sales rose by 0.6% in September, compared with the market consensus for an increase of 0.6%. The August estimate was revised higher from -0.3% to -0.2%. On another note, retail sales are now 2.7% above their year ago level; just a year ago, the year over year growth rate was 2.3%. Spending at motor vehicle dealers climbed by 1.1%. Core Retail Sales rose by 0.5%, compared with the market consensus for an increase 0.5%. The August estimate was revised higher from -0.3% to -0.2%. Also on another note, producer price inflation rose in September, a touch more than expected, as energy prices continue to drive the headline, rising 2.5% after slipping 0.8% in August. Final demand services rose slightly, while core prices rose modestly, slightly more than expected, and are up a modest 1.2% on a year-over-year basis. Overall inflationary pressures at the producer level continue to remain subdued.
Euro traded at 1.0972 against USD at 1:09 pm PST. Italy's consumer prices increased for the first time in eight months in September as initially estimated. The consumer price index edged up 0.1% year-over-year in September, confirming the flash data published on September 30. In August, prices had fallen 0.1%. Excluding unprocessed food and energy, core inflation came in at 0.5% in September, up from 0.4% in the previous month. On another note, the headline Eurozone trade surplus increased to EUR18.4bn for August from EUR11.2bn in August 2015. There was a significant recovery in exports for the month and an annual 8% gain, although exports still declined 1.0% over the first eight months of the year. Imports registered a smaller annual increase of 4% and there was a 3.0% decline over the first eight months of 2016.
British Pound exchange rate is 1.2179 against USD at 1:09 pm PST. British construction output unexpectedly fell in August led by a decline in infrastructure projects but Britain's statistics office said the weakness did not appear to be linked to the Brexit vote in June. Construction volumes fell by a monthly 1.5% in August after a revised increase of 0.5% in July. Economists taking part in a Reuters poll had predicted output would rise by 0.2% in August. Britain's construction industry makes up nearly 6% of the economy and Friday's figures will help investors get a better sense of the impact of the June 23 referendum decision to leave the European Union.
Japanese Yen traded at 104.24 per USD at 1:09 pm PST. Japan's producer prices were flat month-on-month in September, the Bank of Japan said, versus forecasts for a decline of 0.1% after easing 0.3% in August. On a yearly basis, producer prices were down 3.2%, in line with expectations, after sliding 3.6% in August.
Canadian dollar traded at 1.3149 per USD at 1:09 am PST. Sales of existing homes in Canada rose in September, ending four months of declines, while average prices continued to climb largely due to activity in Vancouver, British Columbia and Toronto-area markets. The industry group, which represents realtors across the country, said existing-home sales rose 0.8% month-over-month in September. Sales in two of Canada’s most closely watched areas were mixed, with Vancouver sales down 2.1% and Toronto activity up 3.8%.
Onshore Chinese yuan traded at 6.7272 per USD at 1:09 am PST and offshore Chinese yuan traded at 6.7370 per USD. Global growth sentiment rebounded as China CPI inflation in September rebounded to 1.9% y/y, from 1.3% in August, largely driven by higher food prices. Core inflation also edged higher to 1.7% from 1.6% in August (Q1 1.4%). Meanwhile, China PPI turned positive for the first time since 2012, registering +0.1% y/y. We think the recovery in PPI will continue to support industrial profits while adding pressure to CPI inflation. Upward inflation pressure supports our view of a neutral monetary stance
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.