USD ended the week on a higher note against most of the major world currencies largely on the back of better-than-expected U.S. monthly jobs report. Friday’s monthly jobs report showed that a total of 209,000 jobs were created in July, driving the unemployment rate down to 4.3% from 4.4%. Average hourly earnings growth accelerated to 0.3% from 0.2%. These numbers were good enough to stem the slide in the USD and ease gains in overbought currencies. USD Index (DXY), which tracks the movement of the USD against six major currencies, rose by 0.3% on a week on week basis and is at a level of 93.54.
USD started the week on a low note amid persistent political uncertainty in Washington and doubts over whether the Federal Reserve will hike rates again this year as data on Friday showed that while U.S. economic growth accelerated in the second quarter, wage growth and inflation remained sluggish. The subdued inflation outlook has raised doubts over whether the Fed will be able to stick to plans for a third interest rate hike this year.
National Association of Realtors report on Monday shows that pending home sales rose by 1.5% in June from the previous month. Data released on Tuesday showed that U.S. manufacturing growth slowed slightly in July, while consumer spending and inflation barely rose in June.
The ISM manufacturing index dipped to 56.3 in July from 57.8 in June, which was the highest since March 2002.
U.S. consumer spending rose by 0.1% in the month of June and personal consumption expenditure (PCE) price index rose by 0.1% in June. In the 12 months through June, the core PCE price index increased 1.5% after advancing by the same margin in May.
Institute for Supply Management reported that its index of non-manufacturing activity fell to 53.9 from 57.4 in June against the expectation of a reading of 57.
Payroll processing firm ADP reported that non-farm private employment rose by 178,000 last month against the expectation for an increase of 185,000, followed by the addition 191,000 jobs in June.
U.S. Department of Labour on Thursday reported that the number of individuals filing for initial jobless benefits in the week ended 29th July fell by 5,000 to 240,000 from previous week’s total of 245,000 against the expectations of a fall by 3,000 to 242,000.
British pound depreciated by 0.46% last week against the USD as Bank of England left interest rates on hold at record lows and cut its economic growth forecast for this year and next year and expressed concerns over a “smooth transition to a new economic relationship with the EU. Governor Carney said the central bank’s forecast revisions factor in “uncertainty about the eventual shape of the U.K.’s relationship with the EU.
Asian currencies were mixed last week against the USD. Australian Dollar depreciated by 0.98%, New Zealand Dollar depreciated by 1.21%, Japanese Yen depreciated by 0.01% against the USD and depreciated by 0.21% against the Euro. South Korean Won depreciated by 0.24%, Philippines Peso appreciated by 0.6%, Indonesian Rupiah appreciated by 0.06%, Indian Rupee appreciated by 0.89% against the USD and depreciated by 0.42% against the Euro, Chinese Yuan appreciated by 0.16%, Malaysian Ringgit appreciated by 0.04% and Thai Baht appreciated by 0.27%.