USD ended the week lower despite Federal Reserve hiking interest rates on Wednesday. Fed rate hike effect on the USD was completely overshadowed by trade tensions between US & China, as nothing mattered more than the U.S. tariffs on Chinese imports and China’s retaliatory measures. USD Index (DXY), which tracks the movement of the USD against six major currencies, fell by 0.88% on a week on week basis and is at a level of 89.44. Japanese Yen continue to appreciate on demand for safe haven currencies. Yen appreciated by 1.21% against the USD last week.
The Federal Open Market Committee (FOMC) on Wednesday raised its benchmark interest rate target range by 0.25% to between 1.5% and 1.75%, which places the effective funds rate at about 1.63%, the highest level since 2008. In raising the rate, the Fed noted that “the economic outlook has strengthened in recent months.” However, the Fed did not indicate that it was likely to raise rates four times this year and kept inflation forecasts steady.
President Donald Trump, on Thursday, announced tariffs on USD 50 billion worth of Chinese imports, particularly in the high-technology sector. The new tariffs follow an investigation by the US Trade Representative (USTR) into Chinese trade practices. The investigation suggested state-led efforts in China to force US companies to disclose intellectual property. Following the U.S.’s move to impose tariffs on Chinese imports, China’s commerce ministry proposed a list of 128 U.S. goods as potential retaliation targets, raising the prospect of tit-for-tat war between the two world’s largest economies.
On Friday, U.S. President Donald Trump signed the Congress’ newly passed USD 1.3 trillion spending bill, ending several hours of confusion spurred by a tweeted veto threat that raised the concern of a government shutdown.
University of Michigan’s reported that the U.S. consumer sentiment rose to 102.0 in the month of March compared to February’s reading of 99.7 and against the expectation of a decline to 99.3.
Commerce Department reported on Wednesday that the current account deficit widened by USD 26.7 billion to USD 128.2 billion or 2.6% of GDP against the expectation for the current account deficit to widen to USD 125 billion.
Commerce Department reported on Wednesday that the U.S. Core Durable Goods Orders rose by 1.2% last month against the expectation of a 1.5% rise.
U.S. Existing home sales rose by 3.0% in the month of February from the previous month to an annualized pace of 5.54 million units and against the expectation of 0.5% increase to an annualized pace of 5.41 million.
U.S. New home sales fell by 0.6% in the month of February to an annual rate of 618,000 units against the expectation for a rise by 4.4% to a pace of 623,000 units.
U.S. Department of Labour on Thursday reported that the number of individuals filing for initial jobless benefits in the week ended 17th March rose by 3,000 to 229,000 from last week’s claim of 226,000.
Asian currencies were largely mixed last week against the USD. Australian Dollar depreciated by 0.18%. New Zealand Dollar appreciated by 0.21%. Japanese Yen appreciated by 1.21% against the USD and appreciated by 0.68% against the Euro. South Korean Won depreciated by 1.50%, Philippines Peso depreciated by 0.75%, Indonesian Rupiah depreciated by 0.22%, Indian Rupee depreciated by 0.11% against the USD and depreciated by 0.20% against the Euro, Chinese Yuan appreciated by 0.30%, Malaysian Ringgit depreciated by 0.29% and Thai Baht appreciated by 0.11%.