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Foreign Exchange Market Update

Foreign Exchange Market Update

Please call the FX Department at 626-279-3235 for the most current rate.

January 24, 2020

Overnight Changes in Major Currencies (9am PST)


United States (US): USD Higher as China Virus Worries Recede; US Treasury Secretary Mnuchin Expects Next China Trade Talks in 'Near Future'

USD climbed against its major counterparts after the World Health Organisation said that the spread of the coronavirus in China cannot be declared a global health emergency. The WHO said that the outbreak is an emergency for China, but it has not yet become a global emergency. Beijing has restricted movements in selected cities in an attempt to contain the virus during the busy New Year holidays. The death toll has risen to 26 in China and those infected had been confirmed at 830. 01/24/2020 – 09:08 AM (RTTNews)

U.S. Treasury Secretary Steven Mnuchin said that he expects to begin negotiations with China on a so-called Phase 2 trade deal soon, with Washington and Beijing on the same page. “My guess is they (China) will consider waiving other tariffs as part of their purchasing program,” Mnuchin said of the $200 billion in additional US goods and services that China has pledged to buy. “I don’t see any difference in our views. My expectation is that we’ll start conversations on phase two in the near future,” he said. 01/24/2020 – 07:39 AM (RTTNews)


Australia: Private Sector Output Logs Record Fall

Australian dollar traded at 68.24 U.S. cents at 9:00 am PST. 

Private sector output declined at the sharpest pace since the survey began in May 2016. The Commonwealth Bank of Australia composite output index fell to 48.6 in January from 49.6 in December. Sharper reductions in output were seen across manufacturing and service sectors. The services PMI came in at 48.9, down from 49.8 in December. At the same time, the manufacturing PMI fell marginally to 49.1 from 49.2. 01/23/2020 – 11:13 AM (RTTNews)


New Zealand: New Zealand Inflation Eases

New Zealand dollar traded at 66.01 U.S. cents at 9:00 am PST.

The CPI rose 0.5% QoQ in Q4, slower than 0.7% in Q3. This was the lowest since Q1, when inflation was 0.1%. Prices for transport grew 2.1% in Q4 and recreation and culture rose 1.6%. Housing and household cost increased by 0.5%, while food prices fell 0.6%. On an annual basis, consumer prices rose 1.9% in Q4, after a 1.5% increase in the previous quarter. 01/24/2020 – 12:00 AM (RTTNews)


European Union (EU): EU, China and 15 Others Agree Temporary Fix to WTO Crisis; Professional Forecasters Raise 2020 Eurozone GDP Forecast; Private Sector Logs Moderate Growth

Euro traded at 1.1025 against USD at 9:00 am PST. 

The EU, China and 15 other WTO members agreed to create a temporary mechanism to settle trade disputes after US action rendered the WTO incapable last month of acting as the umpire of global trade. The European Commission said the WTO members involved had agreed to preserve the WTO’s two-step dispute system until the WTO’s own Appellate Body became operational again. 01/24/2020 – 01:54 AM (REUTERS)

Professional forecasters raised the euro area economic growth forecast for this year, while slashed the projection for next year, results of a quarterly survey by the ECB showed. The growth forecast for this year was raised to 1.1% from 1% in Q4 survey. The projection for next year was lowered to 1.2% from 1.3%. Growth was forecast at 1.4% for 2022. The longer-term growth forecast, which is for 2024, is 1.4%, unchanged from the previous round. The inflation forecast for this year and next year was retained at 1.2% and 1.4%, respectively. For 2022, price growth is seen at 1.5% and the longer term projection was retained at 1.7%. Core inflation is forecast at 1.2% this year, same as seen in Q4. The outlook for next year was trimmed to 1.3% from 1.4%. In 2022, core inflation is seen at 1.5% and the longer term projection was kept at 1.6%. 01/24/2020 – 09:37 AM (RTTNews)

The euro area private sector grew at the same moderate pace as seen in the final month of 2019, reflecting muted pace of new order growth. The composite output index held steady at 50.9 in January, indicating a further muted increase in activity across the currency bloc. The score was expected to rise to 51.1. The services PMI fell to 52.2 from 52.8 in December. T manufacturing PMI rose to 47.8 in January from 46.3 in December. While rates of growth in output and new orders remained muted, companies were increasingly confident regarding the year ahead outlook for activity as sentiment rose to a 16-month high. Further, the rate of job creation quickened from that seen at the end of 2019. 01/24/2020 – 07:31 AM (RTTNews)


United Kingdom (UK): UK Private Sector Returns to Growth in January

British Pound traded at 1.3069 against USD at 9:00 am PST. 

The UK private sector returned to growth in January driven by a sharp rise in new work. The composite output index rose to a 16-month high of 52.4 in January from 49.3 in December. The headline reading registered above the crucial 50 score for the first time since August 2019. The service sector expanded at the fastest pace in more than a year and the manufacturing sector moved closer to stagnation. The services PMI advanced more-than-expected to 52.9 in January from 50.0 in December. The manufacturing PMI improved to 49.8 from 47.5 in December. 01/24/2020 – 04:42 AM (RTTNews)

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.

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