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Foreign Exchange Market Update

Foreign Exchange Market Update

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May 14, 2021

Overnight changes in major currencies (9 a.m. PST)

 

United States (US): Producer Prices Rise 0.6% In April, More Than Expected

After yesterday's report showing much faster than expected consumer price growth, the Labor Department released a report on Thursday showing producer prices also increased by more than expected in the month of April. The Labor Department said PPI for final demand rose by 0.6% in April after jumping by 1.0% in March. The report also showed the annual rate of PPI growth accelerated to 6.2% in April from 4.2% in March, with prices showing the biggest annual increase since 12-month data were first calculated in November of 2010. About two-thirds of the monthly advance in PPI can be traced to a 0.6% increase in prices for final demand services. The index for final demand goods also moved up by 0.6%. Excluding prices for food, energy, and trade services, core producer prices, increased by 0.7% in April after climbing by 0.6% in March. Core prices were expected to rise by 0.4%. The Labor Department said core producers were up by 4.6% compared to the same month a year ago, reflecting the largest advance since 12-month data were first calculated in August 2014. Economists expect upward price pressures to persist in the near term before supply constraints are resolved and base effects fade. They believe much of the acceleration in inflation will be transitory and share the Fed's view that this isn't the start of an upward inflationary spiral. Economists will be expecting the pace of inflation to gradually cool heading into 2022. 05/14/2021 - 06:47AM (RTTNews)

 

European Union (EU)

Euro traded at 1.2134 against USD at 9:00 am PST. 

 

Spain: Inflation Highest Since 2018

Spain's CPI accelerated to the highest level in more than two years, as initially estimated, in April, results from the statistical office INE showed on Friday. The CPI rose 2.2% YoY, following a 1.3% increase in March. The rate came in line with the preliminary estimate published on April 29 and was the highest since October 2018, when the inflation rate was 2.3%. Core consumer prices remained flat on year, after rising 0.3% each in March and February, data showed. On a monthly basis, the overall CPI advanced 1.2%, up from 1% in March and matched the flash estimate. Inflation, based on HICP, accelerated to 2% from 1.2% in March. The rate was slightly above the flash estimate of 1.9%. MoM, the HICP gained 1.1%, as initially estimated, from 1.9% in the previous month. 05/13/2021 - 01:40AM (RTTNews)

 

United Kingdom (UK): GBP Set for Second Week Of Gains

British Pound traded at 1.4093 against USD at 9:00 am PST. 

GBP was on track for a second week of gains against USD on Friday, consolidating above $1.40 as the USD took a breather from a recent rally. GBP is up 1.8% against the USD since the start of May, aided by a more hawkish BoE which has begun tapering asset purchases, as well as UK’s vaccination drive that has enabled a gradual reopening of the economy. UK will adapt its vaccine rollout to protect people more quickly in areas where a coronavirus variant first detected in India has emerged, the vaccine minister said on Friday. UK has delivered one of the fastest inoculation campaigns in the world, giving a first shot to almost 70% of the adult population and a second to 36%, helping to reduce infection rates and deaths. GBP is largely holding onto recent gains and progress on the Indian variant of the virus is yet to have any impact. Analysts also say a combination of a stronger UK economic rebound than expected and the belief that any Scottish independence vote is a long way off make the GBP relatively attractive. UK’s economy grew by a stronger-than-expected 2.1% in March from February, gathering speed for what is expected to be a sharp bounce-back this year after its deep coronavirus slump of 2020. 05/14/2021 - 01:37AM (RTTNews)

 

Japan: JPY Drops Amid Rising Risk Appetite

Japanese Yen traded at 109.41 per USD at 9:00 am PST. 

JPY fell against its major counterparts on Friday amid rising risk appetite, as concerns about higher inflation eased after comments from Federal Reserve officials suggested that recent price pressures are transitory. Most Asian stock markets rose, following the broadly positive cues overnight from Wall Street, as indications of a strengthening economy helped soothe some of the concerns about risks from inflation. 05/14/2021 - 03:35AM (RTTNews)

 

Hong Kong: GDP Growth Fastest Since 2010

Hong Kong dollar traded at 7.7663 per USD at 9:00 am PST.

Hong Kong's economy grew at the fastest pace in more than a decade in the first quarter of 2021, revised data from the Census and Statistics Department showed on Friday. Ending six consecutive quarters of contraction, gross domestic product grew by revised 7.9% YoY in the Q1, in contrast to the 2.8% decrease in Q4. A similar faster growth was last reported in Q1 of 2010. The annual growth rate was revised up marginally from 7.8%. On a seasonally adjusted basis, real GDP grew notably by 5.4% sequentially, much faster than the 0.5% expansion seen in the preceding quarter. The rate was revised from the advance estimate of 5.3%. The real GDP is forecast to grow in the range of 3.5% to 5.5% this year, unchanged from the previous projection. However, the government cautioned that economic recovery was uneven and overall economic activity remained below the pre-recession level, as the pandemic continued to weigh on certain economic segments, particularly those involving consumer-facing activities. The forecast rates of underlying and headline consumer price inflation for 2021 were maintained at 1% and 1.6% respectively in the current round of review. 05/14/2021 - 05:52AM (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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