Friday’s U.S. jobs came in positive, re-enforcing the market’s expectations for a rate hike in December. The only stumbling factor for the USD is the Presidential results on the 8th of November and if Hillary Clinton wins the elections, the USD will regain its upward momentum.
USD started the week on a slightly higher note after recovering from Friday’s slide following news that the FBI has re-opened its investigation into Hillary Clinton’s emails case. In the later part of the week, USD fell sharply after many news polls showed that Hillary Clinton was behind Donald Trump ahead of the upcoming U.S. presidential election. USD fell despite the Federal Reserve’s latest FOMC meet where policymakers signalled that they were on track to hike rates next month. USD Index (DXY), which tracks the movement of the USD against six major currencies, fell by 1.30% on a week on week basis and is at a level of 97.07.
The Bank of Japan refrained from expanding its stimulus on Tuesday despite pushing back the time frame for hitting its 2% inflation target. U.S. Fed kept interest rates unchanged on Wednesday, which was widely expected as it was the last policy decision before the 8th November vote and signalled it could hike rates in December as the economy gathers momentum and inflation picks up.
U.S. jobs report showed a year-on-year increase in average hourly earnings of 2.8%, the biggest gain since June 2009, from 2.7% in September. U.S. employers added 161,000 jobs in the month of October below the expectations for a gain of 175,000 jobs. The gain was still seen as an indication of a strong pace of hiring. The Unemployment rate fell to 4.9% in the month of October, which was largely in line with expectation following a 5% rate in September.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 29th October rose by 7,000 to 265,000 from previous week’s total of 258,000 against the expectation of a flat reading.
Bureau of Economic Analysis on Friday reported that U.S. trade deficit fell to USD 36.44 billion from USD 40.46 billion in the preceding month against the expectation of a fall to USD 37.80 billion.
British Pound appreciated by 2.72% against USD last week after UK court ruled that parliament would have to approve the start of Brexit talks. The Bank of England (BoE) in its last policy meet announced that it was maintaining its benchmark interest rate at its current record low of 0.25%. The minutes accompanying the meet states that the announcement was unanimous which suggests that any short-to-medium term cut is now unlikely, which is against the minutes of the last meeting, which stated that the BoE’s policy committee believed that another rate cut would be required before the end of the year.
Asian currencies were largely up last week against the USD on broad USD weakness. Australian Dollar appreciated by 0.97%, New Zealand Dollar appreciated by 2.28%, Japanese Yen appreciated by 1.57% against the USD and by 0.17% against the Euro. South Korean Won appreciated by 0.11%, Philippines Peso appreciated by 0.10%, Indonesian Rupiah depreciated by 0.13%, Indian Rupee appreciated by 0.11% against the USD and depreciated by 1.55% against the Euro, Chinese Yuan appreciated by 0.33%, Malaysian Ringgit appreciated by 0.02% and Thai Baht appreciated by 0.18%.