Japanese Yen sharply appreciated last week against the USD and Euro after BoJ held back further stimulus, defying market expectations for additional monetary easing. Yen is trading at nearly 18-month high levels against the USD after appreciating by 4.97% last week. The Yen appreciated by 2.92% against the Euro. Yen at the start of the week was at its three-week low levels against the USD, largely on the expectation that the BoJ would step up its monetary easing measures in its policy review.
BoJ in its policy review last week left its deposit rate at minus 0.1% and its asset purchases at 80 trillion Yen per year. The decision came on the heels of data showing that consumer prices fell in March at the fastest pace in three years and household spending fell at the fastest rate in a year. BoJ Governor Haruhiko Kuroda said that the Central Bank remained committed towards achieving its 2% inflation target in about two years.
Japanese data showed that household spending declined by 5.3% on yearly basis in the month of March against the expectation of a decline of 4.2%. National core CPI dropped to 0.3% on yearly basis in the month of March against the expectation of a decline of 0.2%.
USD last week was under heavy selling pressure after release of weak U.S. economic data and on the back of the Fed maintaining status quo on rates in its recently concluded FOMC meet. Fed left interest rates unchanged on Wednesday and offered little guidance on future rate hikes. In a statement released following its two-day meeting, the Fed said it will continue to “closely monitor inflation indicators and global economic and financial developments”.
USD Index (DXY), which tracks the movement of the USD against six major currencies, declined by 2.14% on weekly basis closing at levels of 93.02.
U.S. Commerce Department on Monday reported that new home sales declined by 1.5% to 511,000 units in the month of March followed by a decline of 0.4% to 519,000 units and against the expectation of a rise of 1%.
U.S. Commerce Department on Tuesday reported that total durable goods orders rose by 0.8% in the month of March against the expectations of a increase of 1.8% followed by a decline of 3.1% in February. Core durable goods orders, which exclude volatile transportation items, declined by 0.2% in the month of March against the expectation of a rise of 0.5% followed by a decline of 1.3%.
U.S. National Association of Realtors on Wednesday reported that pending home sales index rose by 1.4% in the month of March against the expectations for a rise of 0.5% followed by a rise of 3.4% in February.
U.S. Department of Labour reported that number of individuals filing for initial jobless benefits in the week ended 23rd April rose by 9,000 to 257,000 from the previous week’s total of 248,000 against the expectation of a rise of 12,000 to 260,000.
U.S. Bureau of Economic Analysis on Thursday reported that U.S. economic growth slowed to an annual rate of 0.5%, from the 1.4% expansion registered in the fourth quarter of 2015. Reported growth in GDP was the slowest pace of growth since the first quarter of 2014 and missed the expectations for a 0.7% increase.
University of Michigan on Friday reported that its consumer sentiment index fell to 89.0 in the month of April from 89.7 in March against the expectations for a rise to 90.0.
U.S. Commerce Department reported that personal spending increased by 0.1% in the month of March against the expectations of a rise of 0.2%. Personal income, meanwhile, rose by 0.4% in the month of March against the expectation of a rise of 0.3%.
Commodity linked currencies found support after commodity prices rallied last week, Baltic DRY index gained by 5.97% boosting market sentiments. Crude oil prices rallied sharply last week touching its 2016 high level on Thursday gaining by 7.96%. Brent Crude is currently trading at levels of 48.16 USD/bbl. The sharp rise in crude oil prices came on the expectations that falling U.S. production, strong investor appetite and a weakening USD could push prices higher. Russian Ruble and Brazilian Real sharply appreciated against USD last week by 2.73% and 3.80% respectively.
Asian currencies closed mixed against the USD last week. Australian Dollar depreciated by 1.36%, New Zealand Dollar appreciated by 1.82%, South Korean Won appreciated by 0.34%, Philippines Peso depreciated by 0.57%, Indonesian Rupiah appreciated by 0.11%, Indian Rupee appreciated by 0.23% against USD and depreciated by 0.82% against Euro, Chinese Yuan appreciated by 0.33%, Malaysian Ringgit depreciated by 0.10% and Thai Baht appreciated by 0.52%.