USD strengthend last week despite a disappointing monthly jobs report. USD strengthed after posting its biggest weekly fall in more than seven years against the Yen a week earlier. Last weeks gain largely came after remarks of many Fed officials convinced investors that US interest rates could rise faster than expected even though April hiring data was weaker than forecast.
In the early part of the week USD continued to remain under pressure as policy decisions by the Bank of Japan and the Federal Reserve weighed on the market. Weak Chinese manufacturing data released on Monday further dampened the market sentiment for the USD. USD was also hit after data released showed that the U.S. economy grew at the slowest rate in two years in the first quarter, with gross domestic product increasing just 0.5% from a year earlier.
Data showed that China’s Caixin manufacturing purchasing managers’ index fell to 49.4 in the month of April from 49.7 in the previous month, against the expectations of a rise to 49.9. The weak data has added to the worries over slowdown in the world’s second largest economy.
New York Fed President William Dudley said that it was reasonable to expect the US central bank to raise rates twice in 2016 despite a weak monthly jobs report. Federal Reserve Bank of Atlanta President Dennis Lockhart called a June interest rate increase “a real option”.
ADP on Wednesday reported that U.S. non-farm private employment rose by 156,000 in the month of April against the expectations for an increase of 196,000. The economy created 194,000 jobs in March.
A separate report showed that the U.S. trade deficit narrowed to USD 40.44 billion in the month of April against the expectation of trade deficit to narrow to USD 41.50 billion in March, following a deficit of USD 46.96 billion in February.
Institute of Supply Management on Wednesday reported that its non-manufacturing purchasing manager’s index improved to a four-month high level of 55.7 in the month of April against the expectation for the index to rise to 54.7, following a level of 54.5 in March.
U.S. Census Bureau reported that factory orders increased by 1.1% in the month of March against the expectation of a rise of 0.6%, following a decline of 1.9% in February.
U.S. Department of Labour reported that number of individuals filing for initial jobless benefits in the week ended 29th April rose by 17,000 to 274,000 from the previous week’s total of 257,000 against the expectation of a rise of 3,000 to 260,000.
U.S. Department of Labour reported that the economy added 160,000 jobs in the month of April, disappointing the expectations for an increase of 202,000. The number of jobs rose by 208,000 in March. The report also stated that the U.S. unemployment rate held at 5.0% last month, which was in line with the expectations.
Average hourly earnings in the U.S. rose by 0.3% in the month of April, which was in line with the expectations, after a revised 0.2% gain in the previous month.
Brazilian Real depreciated by 1.89% against the USD last week. The decline came on the back of intervention by the central bank to weaken the currency in order to protect the nation’s exports. The Real has rallied sharply over the last couple of months, supported by weakness in the USD and stabilizing commodity prices. The expectation of political reforms in Brazil is also drawing investments into the economy.
Russian Ruble depreciated by 2.12% against the USD as crude oil prices posted its biggest monthly decline for this year. The oil price decline has pared Ruble 2016 gains to 11%, the highest amongst emerging market currencies after the Brazilian Real.
Asian currencies closed down against the USD last week. Australian Dollar depreciated by 3.12%, New Zealand Dollar depreciated by 2.09%, Japanese Yen depreciated by 0.58% against USD and by 0.19% against Euro. South Korean Won depreciated by 2.59%, Philippines Peso depreciated by 0.29%, Indonesian Rupiah depreciated by 1.25%, Indian Rupee depreciated by 0.34% against USD and by 0.6% against Euro, Chinese Yuan depreciated by 0.28%, Malaysian Ringgit depreciated by 2.49% and Thai Baht depreciated by 0.62%.