U.S. Department of Labour on Friday reported that the economy has added 287,000 jobs in the month of June against the expectations for an addition of 175,000 followed by 11,000 jobs added in May. The report also showed that the unemployment rate ticked up to 4.9% in the month of June from 4.7% in May against the expectations for a rise to 4.8%. The better than expected jobs report lent support to the USD as the markets factored in resumption of rate hikes by the Fed though the time period of hikes is still uncertain.
USD last week traded higher against major currencies on the back of good June jobs numbers and on expectations of easing monetary policy by the Bank of England (BoE). The BoE on Tuesday warned the market on risks to financial stability following the Brexit vote and eased regulatory requirements on the banking sector. In its bi-annual financial stability report, the BoE said that the risks it had feared ahead of the Brexit poll had started to materialise, which lead the Pound to plunge to its 31-year low levels against the USD and on weekly basis the Pound depreciated by 2.36%.
The Bank of England (BoE) in its biannual Financial Stability Report announced a new measure to cut counter cyclical capital buffer rate for U.K. banks to 0% from 0.5%. This will reduce regulatory capital buffers by GBP 5.7 billion (USD 7.5 billion), raising banks’ capacity to lend to households and businesses by up to GBP 150 billion. BoE Governor Mark Carney in a press conference said that the move represented a “major change” that would help the economy to cope with the Brexit consequences.
The Fed FOMC minutes released on Wednesday showed that Federal Reserve policymakers were divided over whether US economic conditions would be strong enough to weather an interest rate increase and also noted that the Brexit vote and weak May jobs growth as factors for waiting to hike rates. Last month, the FOMC voted to leave rates steady amid weakening labour market conditions and the threat of a U.K. exit from the EU
USD Index (DXY), which tracks the movement of the USD against six major currencies was higher by 0.68% week on week closing at levels of 96.30. U.S. Commerce Department on Tuesday reported that U.S. new factory orders fell slightly more than expected in May as data showed that orders fell by 1.0% after a rise of 1.8% in April against the expectation of a decline of 0.9%.
U.S. Bureau of Economic Analysis on Wednesday reported that the U.S. trade deficit widened to USD 41.14 billion in the month of May from USD 37.38 billion in April against the expectation for trade deficit to widen to USD 40.00 billion.
Institute of Supply Management on Wednesday reported that its non-manufacturing purchasing manager’s index rose to an eight-month high of 56.5 in the month of June from 52.9 in May against the expectation for the index to rise to 53.3.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 2nd July decreased by 16,000 to 254,000 from the previous week’s total of 270,000 against the expectation of a rise of 2,000 to 272,000.
The report came after U.S. Payroll processing firm ADP reported that non-farm private employment rose 172,000 in the month of June against the expectation for an increase of 159,000 followed by 168,000 jobs in May.
Brazilian Real depreciated against the USD by 1.93% as commodities traded lower and on Central Bank intervention throughout the week to weaken the currency.
Asian currencies were mixed last week. Australian Dollar, New Zealand Dollar and Japanese Yen were higher last week against the USD. Australian Dollar appreciated by 0.95%, New Zealand Dollar appreciated by 1.83% and Japanese Yen appreciated by 1.97% against the USD and by 2.75% against the Euro. South Korean Won depreciated by 1.44%, Philippines Peso depreciated by 0.49%, Indonesian Rupiah depreciated by 0.49%, Indian Rupee depreciated by 0.07% against the USD and appreciated by 0.53% against the Euro, Chinese Yuan depreciated by 0.46%, Malaysian Ringgit depreciated by 0.9% and Thai Baht depreciated by 0.24%.