USD, last week, came under strong pressure from long unwinding as it extended previous to last week’s losses against major world currencies. USD started its fall after the Federal Reserve hiked interest rates in its last concluded policy meet and reiterated that the future pace of rate hikes would be gradual, disappointing market expectation for an accelerated pace of monetary tightening. The sharp strength in the Euro further pressured the USD. Euro strength was largely on the expectation of monetary tightening by the European Central Bank later this year and a more positive outlook for the French presidential elections.
Nine Federal Reserve official were to speak last week including Fed chair Janet Yellen and none of them came to the rescue of the USD. Further, release of weak U.S. economic data and uncertainty over President Donald Trump’s policy to boost economic growth weighed on the USD as market viewed the Trump administration’s struggles to push through a healthcare overhaul as a sign he may also face setbacks delivering on other policy pledges including corporate tax cuts, regulatory reforms and infrastructure spending. USD Index (DXY), which tracks the movement of the USD against six major currencies, fell by 0.67% on a week on week basis and is at a level of 99.63.
Chicago Fed President Charles Evans said on Monday that the Fed is on track to raise rates twice more this year, underlining the view that the central bank will stick to a gradual pace of tightening after last week’s rate hike.
U.S. National Association of Realtors reported that the existing home sales declined by 3.7% in the month of February to 5.48 million units from 5.69 million units in January against the expectations of a decline of 2.0% to 5.57 million units.
U.S. Department of Labour on Thursday reported that the number of individuals filing for initial jobless benefits in the week ended 18th March rose by 15,000 to 258,000 from previous week’s total of 243,000 against the expectations of a fall of 1,000 to 240,000.
U.S. Commerce Department on Thursday reported that the new home sales rose by 6.1 % to 592,000 units in the month of February against the expectations of a 0.7% increase to 565,000 units.
U.S. Commerce Department reported that durable goods orders increased by 1.7% last month against the expectations for a gain of 1.2%. Core durable goods orders increased by 0.4% last month against the expectations for a 0.4% gain.
Euro appreciated by 0.56% against USD last week as opinion polls showed that Emmanuel Macron consolidated his status as frontrunner in France’s presidential election against his main rival, far-right anti-EU leader Marine Le Pen. Le Pen has pledged to take France out of the Euro and hold a referendum on EU membership.
British pound appreciated by 0.62% against USD last week. Pound was boosted by recent hawkish remarks from the Bank of England and data showed that the annual rate of inflation in the UK rose to the highest level since September 2013 in February.
Asian currencies were largely up last week on broad USD weakness. Australian Dollar depreciated by 1.05%, New Zealand Dollar appreciated by 0.16%, Japanese Yen appreciated by 1.22% against the USD and by 0.67% against the Euro. South Korean Won appreciated by 0.81%, Philippines Peso depreciated by 0.14%, Indonesian Rupiah appreciated by 0.14%, Indian Rupee appreciated by 0.09% against the USD and depreciated by 0.44% against the Euro, Chinese Yuan appreciated by 0.29%, Malaysian Ringgit appreciated by 0.21% and Thai Baht appreciated by 0.77%.