USD ended the week lower last week amid global trade tensions and U.S. political turmoil. The USD came under additional selling pressure after the release of weak U.S. economic data denting the investor expectations for a faster pace of rate hikes this year. USD Index (DXY), which tracks the movement of the USD against six major currencies, fell by 0.1% on a week on week basis and is at a level of 90.00. Japanese Yen appreciated by 1.12% against USD last week as the demand for safe haven assets rose amid political uncertainty in the U.S.
After several high-profile departures from the White House including the pro-free-trade chief economic advisor Gary Cohn and the State of Secretary Rex Tillerson, the administration of U.S. under President Donald Trump is set to be populated by hawkish officials who embrace protectionism and military activity.
President Donald Trump fired Secretary of State Rex Tillerson after the two failed to reconcile their differing views on the Iran nuclear deal. Trump hired Central Intelligence Agency Director Mike Pompeo as Tillerson’s replacement and appointed Larry Kudlow as the top economic advisor.
Kudlow, previously known as a free trade advocate, reportedly said that China will be the target for tariffs, which increased the prospects of a U.S.-China trade war. Kudlow also hinted support for a stronger USD in an interview.
USD started the week on a lower note, as U.S. jobs report for the month of February released earlier showed that average hourly earnings rose by just 0.1% in February for an annual rate of 2.6%, down from 2.8% in January. The slowdown in wage growth dampened expectations for four rate hikes by the Federal Reserve this year. The expectations weakened further on Tuesday after the lack of an upside surprise in the inflation data and U.S. President Donald Trump firing of Secretary of State Rex Tillerson on Twitter.
U.S Labour Department reported that the consumer price index rose 0.2% from February and was up 2.2% from the same month a year earlier, in line with the expectations. Core CPI, rose 0.2% in February and was up 1.8% from a year earlier, also in line with the expectation.
President Trump reportedly ousted his Secretary of State Rex Tillerson on Twitter on Tuesday – another personnel shakeup from the administration following the departure of top economic advisor Gary Cohn last week.
Data released on Wednesday showed that U.S. retail sales fell 0.1% in February against the expectation of 0.3% rise, followed by a decline of 0.1% in January. It was the third consecutive monthly decline, raising fears over a slowdown in growth in the first quarter.
U.S. Labour Department on Wednesday reported that U.S. producer prices rose slightly more than expected last month. Data showed that producer price index for final demand increased 0.2% last month. In the 12 months through February, the PPI rose 2.5% after rising 2.2% in the prior month.
USD recovered during the latter part of the week after data released showed that import prices rose 0.4% in the month of February, against the expectation for a rise of 0.3% fuelling expectations for a pickup in inflation this year.
U.S. Department of Labour on Thursday reported that the number of individuals filing for initial jobless benefits in the week ended 10th March fell by 4,000 to 226,000 from last week’s claim of 230,000.
Asian currencies were largely higher last week against the USD. Australian Dollar depreciated by 0.97%. New Zealand Dollar depreciated by 0.54%. Japanese Yen appreciated by 1.12% against the USD and appreciated by 0.96% against the Euro. South Korean Won appreciated by 0.34%, Philippines Peso appreciated by 0.21%, Indonesian Rupiah appreciated by 0.33%, Indian Rupee appreciated by 0.35% against the USD and appreciated by 0.17% against the Euro, Chinese Yuan appreciated by 0.14%, Malaysian Ringgit appreciated by 0.11% and Thai Baht appreciated by 0.44%.