USD ended the week higher largely on the back of easing trade tensions between U.S. & China, better than expected U.S. economic data and hopes for a diplomatic breakthrough with North Korea. USD Index (DXY), which tracks the movement of the USD against six major currencies, rose by 0.60% on a week on week basis and is at a level of 89.97. Japanese Yen depreciated against USD as investors risk appetite recovered on easing geopolitical worries. Yen depreciated by 1.45% against the USD last week.
China confirmed on Wednesday that North Korea’s leader Kim Jong Un had pledged his commitment to denuclearization while U.S. President Donald Trump tweeted that Kim looked forward to meeting with him. The developments prompted speculation that a breakthrough over North Korea’s nuclear program could be growing closer.
USD started the week lower but rebounded on Tuesday amid receding trade tensions between the world’s two largest economies, as the U.S. and China hinted talks to ease fears of a full-blown trade war.
Easing concerns over trade wars has boosted investor risk appetite, as China and the U.S. are in talks to find a mutually agreeable approach to narrow the trade deficit gap. U.S. Treasury Secretary Steven Mnuchin said he is “cautiously hopeful” that China would reach a deal to avoid tariffs on USD 50 billion of exports.
USD extended its gain on Wednesday after the release of upbeat U.S. economic data offset renewed fears over the prospect of trade war as a Chinese newspaper reported that Beijing will soon announce a list of tariffs on U.S. exports to China in response to proposed U.S. tariffs on Chinese imports.
U.S. Commerce Department reported that the U.S. economy grew 2.9% on a year-over-year basis in the final three months of 2017, up from an earlier estimate of 2.5%, but slowing slightly from 3.2% in the third quarter. Consumer spending was revised up to 4.0% from 3.8% in the second estimate, which was the biggest increase in three years. The data has boosted the expectations for a slightly more aggressive pace of interest rates hikes by the Federal Reserve this year.
U.S. National Association of Realtors’ reported that U.S. pending home sales index rose 3.1% to 107.5 in the month of February against the expectation for a rise by 2.1%, followed by a decline of 5% in January.
U.S. Commerce Department reported that consumer spending rose 0.2% in February, lagging behind income growth, which rose 0.4% last month.
The personal consumption expenditures (PCE) price index rose 1.6% in the 12 months through February, in line with the expectation, followed by 1.5% in January.
U.S. Department of Labour on Thursday reported that the number of individuals filing for initial jobless benefits in the week ended 24th March dropped by 12,000 to 215,000 from last week’s claim of 227,000 and against the expectation of a rise of 3,000 to 230,000.
Asian currencies were mixed last week against the USD. Australian Dollar depreciated by 0.26%. New Zealand Dollar appreciated by 0.06%. Japanese Yen depreciated by 1.45% against the USD and depreciated by 1.20% against the Euro. South Korean Won appreciated by 1.76%, Philippines Peso appreciated by 0.28%, Indonesian Rupiah appreciated by 0.39%, Indian Rupee depreciated by 0.25% against the USD and depreciated by 0.76% against the Euro, Chinese Yuan appreciated by 0.65%, Malaysian Ringgit appreciated by 1.42% and Thai Baht appreciated by 0.07%.