Japanese Yen last week came under pressure and bounced back from highs after Japan’s Finance Minister Taro Aso said on Tuesday that he would take various measures against excessive currency volatility and added that rapid currency moves are unwelcome. BoJ is scheduled to meet on 28th April. Yen last week sharply depreciated by 2.71% against USD and by 2.22% against Euro.
Japanese Yen since the start of the year 2016 has strengthened broadly on investor uneasiness about negative interest-rate policies in Japan and Europe, which has bolstered the investor appetite for safe haven assets. The strong yen is posing a challenge to BoJ’s attempts to shore up inflation to its target level of 2%
USD started the week on a lower note as market sentiment remained fragile after major crude exporters failed to agree on an output freeze at a meeting in Doha on Sunday. Release of disappointing U.S. housing sector data also fuelled concerns over the strength of the economy. However, in the later part of the week, USD pared its losses and managed to end the week in positive territory. USD Index (DXY), which tracks the movement of the USD against six major currencies, rose by 0.44% on weekly basis closing at levels of 95.12.
The OPEC meeting talks collapsed after Saudi Arabia demanded that Iran must also join the agreement to curb the output. However, Iran had already declined to take part in the talks and said it would not participate in an output freeze until its output levels returned to levels where it was before the international sanctions, which was imposed on Iran over its nuclear program activity.
U.S. industrial production fell more than expected in the month of March by 0.6% against the expectation of a decline of 0.1% followed by a same reading in February. U.S. consumer sentiment deteriorated slightly this month to 89.7 from the expected reading of 90.
U.S. Census Bureau on Tuesday reported that building permits fell by 7.7% in the month of March to 1.086 million units against the expectation of a rise to 1.2 million units followed by 2.2% decline in February.
U.S. housing starts declined by 8.8% in the month of March to 1.089 million units against the expectation of 1.170 million units followed by a rise of 6.9% to 1.194 million units in February.
U.S. National Association of Retailers on Wednesday reported that existing home sales rose by 5.1% in the month of March to 5.33 million units against the expectation of a rise of 3.5% to 5.30 million units followed by 5.07 million units in February.
U.S. Department of Labour reported that number of individuals filing for initial jobless benefits in the week ended 16th April fell by 6,000 to 247,000 from the previous week’s total of 253,000 against the expectation of a rise of 10,000 to 263,000.
Euro last week depreciated by 0.55% against USD after European Central Bank (ECB) left its benchmark interest rate unchanged at a record low of 0.0% which was in line with the expectation. The ECB also kept the size of its monthly quantitative easing program unchanged at 80 billion Euro.
Commodity linked currencies found support during the week but later failed to hold gains. The gains came after sharp rise in oil prices, which touched its highest level seen since November. The sharp surge in oil prices came after oil workers in Kuwait went on a strike, which cut the country’s crude production to nearly half. Crude oil prices further found support after the International Energy Agency said that 2016 would see the biggest fall in non-OPEC production in a generation.
Asian currencies were largely mixed against the USD last week. Australian Dollar depreciated by 0.22%, New Zealand Dollar depreciated by 0.97%, South Korean Won appreciated by 0.26%, Philippines Peso depreciated by 1.1%, Indonesian Rupiah depreciated by 0.13%, Indian Rupee appreciated by 0.24% against USD and appreciated by 0.50% against Euro, Chinese Yuan depreciated by 0.37%, Malaysian Ringgit appreciated by 0.06% and Thai Baht depreciated by 0.10%.