USD continued to strengthen last week as markets digested Friday’s U.S. jobs report and disappointing trade data from China. USD initially was slightly under pressure on Monday after a disappointing Jobs report, which showed that the U.S. economy added jobs at the slowest rate in seven months in the month of April, but was later supported as annual wage growth picked up last month.
USD Index (DXY), which tracks the movement of the USD against six major currencies, rose by 0.77% on weekly basis closing at levels of 94.61.
Chinese data released on Sunday showed that exports and imports fell more than expected in April, underlining weak demand domestically and overseas and weakening hopes of a recovery in the world’s second-largest economy. Data showed that exports fell by 1.8% in the month of April compared to last year and imports fell by 10.9% in the month of April compared to last year.
USD rallied against Yen last week as it found strong support from the statement made by Japan’s Finance Minister Taro Aso who said on Monday that Tokyo is ready to intervene in the currency market if excessive moves in the Yen affect Japan’s trade, economic and fiscal policies.
USD fell to 18-month lows of JPY 105.05 against the Yen last week after the U.S. Treasury late last month added Japan to a watch list of countries it is monitoring to gauge whether their foreign exchange policies provide an unfair trade advantage.
U.S. Department of Labour reported that number of individuals filing for initial jobless benefits in the week ended 6th May rose by 20,000 to 294,000 from the previous week’s total of 274,000 against the expectation of a decline of 4,000 to 270,000.
U.S. Commerce Department on Friday reported that U.S. retail sales increased by 1.3% in the month of April against the expectation of a rise of 0.8% followed by a decline of 0.3% in March. U.S. Core retail sales increased by 0.8% in the month of April, beating expectation of an advance of 0.5%.
U.S. producer price inflation rose by 0.2% in the month of April against the expectation of a gain of 0.3% followed by 0.1% decline in March. On yearly basis producer prices were flat. Core PPI, which excludes food and energy, fell by 0.1% in the month of April.
University of Michigan on Friday reported that its consumer sentiment index rose to 95.8 in the month of May from April’s reading of 89.0 and against the expectation of a rise to 90.0 this month.
Euro depreciated last week by 0.83% against USD largely on broad USD Strength. Euro came under further pressure on Friday after the release of GDP data, which showed that Eurozone GDP grew at a rate of 0.5% in the first quarter, from 0.3% in the preceding quarter, which was below the initial reading of 0.6% released on 29th April and against the expectation of no change. Year-on-year, GDP rose by 1.5%, which was also below the initial estimates and against the expectation of a growth of 1.6%.
Brazilian Real depreciated by 0.89% last week against USD. Brazilian Real fell after a vote by the country’s Senate to impeach president Dilma Rousseff, halting early week pre-vote rally. The impeachment process was passed on Thursday by 55-22 voting, paving the way for Ms Rousseff to be suspended for six months and for vice-president Michel Temer to be appointed interim president.
Asian currencies closed largely down against the USD last week. Australian Dollar depreciated by 1.29%, New Zealand Dollar depreciated by 0.82%, Japanese Yen depreciated by 1.39% against USD and by 0.55% against Euro. South Korean Won depreciated by 0.15%, Philippines Peso appreciated by 0.99%, Indonesian Rupiah appreciated by 0.17%, Indian Rupee depreciated by 0.33% against USD and appreciated by 0.3% against Euro, Chinese Yuan depreciated by 0.55%, Malaysian Ringgit depreciated by 0.66% and Thai Baht depreciated by 0.95%.