USD ended lower last week despite a hawkish Federal Reserve and a better than expected April jobs report. USD came under pressure largely due to a stronger Euro, which is currently trading at its multi-month high level against the USD. USD Index (DXY), which tracks the movement of the USD against six major currencies, fell by 0.41% on a week on week basis and is at a level of 98.65.
Euro appreciated by 0.95% against the USD last week and is currently trading at its strongest level in six months. The strength in Euro can largely be attributed to better-than-expected economic data and the optimism for this weekend’s final French Presidential election. The expectation for Emmanuel Macron winning the final phase of French Presidential election received a boost after polls declared that Emmanuel Macron won a TV presidential debate against Marine Le Pen.
U.S. Federal Reserve concluded its two-day policy meeting on Wednesday, giving a positive assessment of the U.S. economy while keeping rates unchanged, which was widely expected. The Fed in its statement said that it expects the economy to rebound after hitting a soft patch in the first three months of the year, noting that the labour market looks solid and inflation is running close to its target. Fed statement further indicated that the policymakers think the recent weakness in the economy was temporary and that more rate hikes are coming this year.
April jobs report was positive with job additions rebounding to 211,000 in the month of April against the expectation of 185,000 followed by 79,000 in March. The unemployment rate dropped to 4.4%, the lowest level since May 2007 and most importantly, average hourly earnings rose by 0.3%. However, the problem was in the revisions. March job addition was revised lower to 79,000 from 98,000 and average hourly earnings was revised to 0.1% from 0.2%.
Institute of Supply Management reported that its manufacturing purchasing managers’ index fell to 54.8 in the month of April from 57.2 in March, against the expectation for a downtick to 56.5.
U.S. personal spending was flat in the month of March, against the expectations for a 0.2% rise and after a 0.1% gain in February. Institute for Supply Management reported that its non-manufacturing purchasing managers’ index rose to 57.5 in the month of April from 55.2 in March against the expectation of 55.8.
U.S. Department of Labour on Thursday reported that the number of individuals filing for initial jobless benefits in the week ended 29th April fell by 19,000 to 238,000 from previous week’s total of 257,000 against the expectations of a decline of 10,000 to 247,000.
U.S. Commerce Department reported that the U.S. trade deficit shrank to USD 43.7 billion in the month of March as both imports and exports declined. U.S. factory orders rose by 0.2% in the month of March, a significant decline from February’s gain of 1.2%, and against the expectation of 0.4% rise.
Asian currencies were largely down last week against the USD. Australian Dollar depreciated by 0.85%, New Zealand Dollar appreciated by 0.76%, Japanese Yen depreciated by 1.08% against the USD and by 1.94% against the Euro. South Korean Won depreciated by 0.21%, Philippines Peso appreciated by 0.32%, Indonesian Rupiah depreciated by 0.01%, Indian Rupee depreciated by 0.2% against the USD and depreciated by 0.38% against the Euro, Chinese Yuan depreciated by 0.14%, Malaysian Ringgit appreciated by 0.05% and Thai Baht depreciated by 0.26%.