USD last week was volatile amid weak market sentiments after IMF warning signals. USD Index (DXY), which tracks the movement of the USD against six major currencies, rose by 0.49% on weekly basis closing at levels of 94.70. USD index started the week on a lower note, touching its 17-month low levels on Monday and the USD touched 8-month low levels against other major currencies.
USD weakened in the early part of the week on the view that the Federal Reserve will stick to a cautious approach on hiking interest rates this year amid concerns over the outlook for the global economy. IMF said that weaker growth could leave the global economy more vulnerable to shocks such as currency depreciations or worsening geopolitical conflicts.
USD gained mid week as demand for the safe heaven rose after International Monetary Fund (IMF) cut its forecast for global economic growth this year to 3.2%, -0.2 percentage points down from its January 2016 forecast and also cut its global growth forecast for 2017 to 3.5% down from its 3.6% growth forecast in January.
Bank of Japan Governor Haruhiko Kuroda said on Wednesday that the central bank was prepared to ease monetary policy again if necessary, adding that there are “many ways” to do so in order to reach its 2% inflation target. BoJ is scheduled to meet on 28th April.
Data on Tuesday showed that U.S. import prices rose by 0.2% in the month of March against the expectations of a rise of 1.0% followed by a decline of 0.4% in February.
U.S. Census Bureau on Wednesday reported that retail sales fell by 0.3% in the month of March against the expectation for a rise of 0.1%, followed by fall of 0.1% in the preceding month. Core retail sales rose by 0.2% last month against the expectations for a 0.4% rise, followed by 0.1% fall in February.
U.S. producer price index fell by 0.1% in the month of March against the expectation of a rise of 0.2%, followed by 0.2% decline in the preceding month. On yearly basis producer prices fell by 0.1% in the month of March against the expectations of a rise of 0.3%. Core PPI fell by 0.1% in the month of March against the expectation for a 0.1% rise, followed by a flat reading in February.
U.S. Department of Labour reported that number of individuals filing for initial jobless benefits in the week ended 9th April fell by 13,000 to 253,000 from the previous week’s total of 266,000 against the expectation of a rise of 3,000 to 270,000.
U.S. industrial production fell by 0.6% in the month of March against expectation of a decline of 0.1%. Manufacturing production declined by 0.3% in the month of March against the expectation of a rise of 0.1%.
Brazilian Real appreciated by 1.65% against the USD last week on the growing expectation that President Dilma Rousseff could soon be impeached, paving the way for a more market friendly government. Brazilian Central Bank intervened last week to weaken the Real by stepping up its USD purchases in the domestic futures markets, using instruments known as reverse currency swaps.
Russian Ruble appreciated by 0.95% against USD last week largely on the expectations that major oil producers will agree to freeze output at a meeting. U.S. crude oil prices rose by 4% last week from 41.29 USD/bbl to 42.94 USD/bbl. On Tuesday it touched its highest level since November 2015 after gaining 4.5% and has gained nearly 10% so far in the month of April.
Asian currencies were largely mixed against the USD last week. Australian Dollar appreciated by 2.24%, New Zealand Dollar appreciated by 1.62%, Japanese Yen depreciated by 0.63% against USD and appreciated by 0.38% against Euro, South Korean Won appreciated by 0.66%, Philippines Peso depreciated by 0.04%, Indonesian Rupiah depreciated by 0.26%, Indian Rupee depreciated by 0.27% against USD and appreciated by 0.56% against Euro, Chinese Yuan depreciated by 0.18%, Malaysian Ringgit depreciated by 0.04% and Thai Baht appreciated by 0.16%.