USD ended last week lower as the market continued to digest Fed’s recent rate hike. Mixed US economic data released last week added volatility to the USD, as it painted a mixed picture of the U.S. economy giving no clues as to how fast the Federal Reserve will raise interest rates next year. USD Index (DXY), which tracks the movement of the USD against six major currencies, declined by 0.75% on weekly basis and closed at levels of 97.97.
USD started the week on lower note on Monday and extended the loss on Tuesday after U.S. Commerce Department reported that U.S. GDP grew at an annual rate of 2.0% in the three months ending 30th September, better than expectations of 1.9% but underperforming the initial estimate of 2.1%, followed by 3.9% growth in the second quarter.
U.S. National Association of Realtors on Tuesday reported that existing home sales declined by 10.5% to a 19-month low of 4.76 million units in the month of November against the expectation of 5.35 million units followed by 5.32 million in October.
U.S. Commerce Department on Wednesday reported that durable goods orders remained unchanged in the month of November against the expectation of a decline of 0.6%. Core durable goods orders, excluding volatile transportation items, declined by 0.1% in the month of November against the expectations of a gain of 0.1%.
Core PCE price index rose by 0.1% in the month of November. On an annualized rate, the core PCE price index rose by 1.3%. U.S. personal spending rose by 0.3% in the month of November in-line with the expectation. Personal income rose by 0.3%, beating the expectation of a gain of 0.2%.
U.S. Commerce Department on Wednesday reported that new home sales rose by 4.3% to 490,000 units last month against the expectations of a gain of 2.0% to 505,000 followed by 470,000 units in October.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 18th December fell by 5,000 to 267,000 from the previous week’s total of 272,000 against the expectation of a fall by 2,000 to 270,000.
Euro appreciated by 0.85% last week against USD despite political concerns in Spain, as in the last week’s concluded elections, no party received clear mandate to govern the country. Euro is expected to remain vulnerable in coming weeks amidst growing political concerns in Spain.
Spanish Prime Minister Mariano Rajoy said on Monday that his centre-right People’s Party (PP) would talk to rivals in a bid to form a government, but the left-wing parties reportedly said they would not want Rajoy to remain in power.
Brazilian Real appreciated by 0.98% last week against USD. The gain came after Brazil’s new finance minister Nelson Barbosa reiterated on Tuesday that the government will maintain the same fiscal policies intended to shrink the budget deficit and cut debt.
Russian Ruble appreciated by 0.14% last week against USD. Ruble gained as crude prices, which have a high correlation with the strength of the Ruble, rose by almost 2% in last week.
Asian currencies were largely mixed against the USD last week. Australian Dollar appreciated by 1.45%, New Zealand Dollar depreciated by 2.09%, Japanese Yen appreciated by 0.71%, South Korean Won appreciated by 1.13%, Philippines Peso appreciated by 0.60%, Indonesian Rupiah appreciated by 2.10%, Indian Rupee appreciated by 0.29% against USD and depreciated by 0.43% against Euro, Chinese Yuan appreciated by 0.08%, Malaysian Ringgit depreciated by 0.30% and Thai Baht appreciated by 0.17%.
Yen appreciated against USD last week after BoJ failed to live up to market expectations in its 18th December policy meet. The BoJ resisted increasing the bond purchase program from the existing level of 80 trillion Yen. There was a slight change in the easing policy. The BoJ set up a program to buy ETFs worth 300 billion Yen annually. The BOJ also extended the average maturity of bond purchases to 7- 12 years from 7-10 years.