USD rose to a fresh one-month high against the Japanese Yen despite August job numbers missing estimates with payrolls rising by 151,000 against expectations of 180,000. Wage growth slowed by 0.1% and the unemployment rate held steady at 4.9% in August. The markets still expect the Fed to stay firm on rate hikes as the US labor market is still exhibitng strength. USD Index (DXY), which tracks the movement of the USD against six major currencies, posted gain of 0.29% week on week after erasing its early decline and closed at levels of 95.84.
USD started the week on a high note after hawkish comments from both Fed Chair Janet Yellen and Vice Chair Stanley Fischer, which raised expectations for a rate hike by the Fed in 2016 and the expectations were well supported by the release of upbeat U.S. economic data on Monday. U.S. Commerce Department on Monday reported that personal spending increased by 0.3% in the month of July, which was in line with expectations. The core PCE price index was up by 1.6% on a year-over-year basis.
The Conference Board on Tuesday reported that consumer confidence index rose to an 11-month high of 101.1 in the month of August from a reading of 96.7 in July against the expectations for the index to slip to 97, August’s reading was its highest since September 2015.
U.S. National Association of Realtors on Wednesday reported that pending home sales rose 1.3% last month against the expectations for an increase of 0.6% followed by a decline of 0.8% in June.
In addition, U.S. payroll processing firm ADP reported that nonfarm private employment rose by 177,000 in the month of August, surpassing expectations for an increase of 175,000 followed by 194,000 jobs in July.
USD came under pressure on Thursday after data showed that U.S. manufacturing activity fell to a seven-month low in August. The Institute for Supply Management said its index of manufacturing activity dropped to 49.4 in the month of August from July’s reading of 52.6. It was the worst reading since January and missed expectations of decline to 52.0.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 27th Aug rose by 2,000 to 263,000 from the previous week’s total of 261,000 against the expectation of a rise of 4,000 to 265,000.
U.S. Labour Department on Friday reported that the economy added 151,000 jobs in the month of August, against the expectations for an increase of 180,000 followed by addition of 275,000 in July. The U.S. unemployment rate remained unchanged at 4.9% missing expectations for a downtick to 4.8%. The report also showed that average hourly earnings rose by 0.1% in the month of August against the expectations of 0.2% increase and after a 0.3% gain in the previous month.
The Bureau of Economic Analysis reported that the U.S. trade deficit narrowed to USD 39.47 billion in the month of July from USD 44.66 billion in June against the expectation of the trade deficit to narrow to USD 42.70 billion.
Brazilian Real appreciated by 0.27% against USD last week as president Dilma Rousseff was impeached, paving the way for a fundamental shift in economic policy after the country sank into its deepest recession in a century. Congress had begun impeachment proceedings last December on allegations that Rousseff used accounting tricks to mask the size of a budget deficit.
GBP appreciated by 1.2% against USD last week on the back of the manufacturing PMI report, which rose to its strongest level since October 2015. Data showed that the index rose to 53.3 in the month of August from 48.3 in July and against the expectation of slight uptick to 49.
Asian currencies were largely mixed against the USD last week. Australian Dollar appreciated by 0.12%, New Zealand Dollar appreciated by 0.69%, Japanese Yen depreciated by 2% against the USD and by 1.69% against the Euro. South Korean Won depreciated by 0.31%, Philippines Peso depreciated by 0.70%, Indonesian Rupiah depreciated by 0.26%, Indian Rupee appreciated by 0.35% against the USD and by 1.18% against the Euro, Chinese Yuan depreciated by 0.16%, Malaysian Ringgit depreciated by 1.77% and Thai Baht appreciated by 0.10%.