USD weakened marginally last week as it consolidated its gains post Fed meet. Fed, in its October FOMC meet, maintained status quo on rates but indicated interest rate hikes in its December meeting. However the expectation of December rate hike dampened marginally after U.S reported string of downbeat economic data including third quarter GDP growth rate that missed expectations.
Bank of Japan in its one-day policy meet on Friday decided to leave the bank’s policy target unchanged, which was in-line with expectations and gave an indication that policymakers are confident that the economy will rebound in the coming months and that the underlying trend of prices continues to rise.
USD Index (DXY), which tracks the movement of the USD against six major currencies, weakened by 0.19% on weekly basis and closed at levels of 96.95.
USD started the week on a lower note from two and half months highs, as data released on Monday brought USD under pressure. USD had rallied on ECB signalling potential expansion of its quantitative easing programme and on PBOC surprise rate cut.
On Monday, data showed that U.S. new home sales declined by 11.5% in the month of September to 468,000 units against the expectation of a decline of 0.4% to 550,000 units followed by 529,000 units in August.
U.S. Commerce Department on Tuesday reported that total durable goods orders declined by 1.2% in the month of September, which was in-line with expectations followed by the decline of 3% in August. Core durable goods orders declined by 0.4% in the month of September against the expectation of an increase of 0.1% followed by decline of 0.9% in August.
Index of consumer confidence fell to 97.6 in the month of October against the expectation of 103 followed by a reading of 102.6 in September.
U.S. National Association of Realtors on Thursday reported that U.S. pending home sales index declined by 2.3% in the month of September against the expectation of a gain of 1.0% followed by decline of 1.4% in August.
U.S. Commerce Department reported that U.S. gross domestic product grew at an annual rate of 1.5% in the third quarter, missing the expectations of a growth of 1.6% following growth of 3.9% seen in the previous quarter.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 24th October rose by 1,000 to 260,000 from the previous week’s total of 259,000 and against expectations of a rise of 4,000.
Euro depreciated by 0.11% against the USD last week. Euro will continue to remain under pressure because of the divergence in monetary policy between the two central banks.
Brazilian Real appreciated by 0.53% against USD last week. The gain came amid speculation that the banks are pushing down the PTAX rate. This is the currency reference rate set by the central bank on every business day after collecting data from market players. Brazilian central bank on 29th October cited that it will remain vigilant. This suggests that future rate hikes are not ruled out.
Russian Ruble depreciated by 2.48% against USD last week as the Fed signalled that it may raise interest rates as soon as December, giving rise to the speculation the Bank of Russia will choose to protect its currency by limiting the scale of its own policy easing.
Asian currencies were mixed last week. Australian Dollar depreciated by 1.08%, New Zealand Dollar appreciated by 0.37%, Japanese Yen appreciated by 0.70%, South Korean Won depreciated by 1.37%, Philippines Peso depreciated by 0.79%, Indonesian Rupiah depreciated by 0.46%, Indian Rupee depreciated by 0.67% against USD and by 0.49% against Euro, Chinese Yuan appreciated by 0.53%, Malaysian Ringgit depreciated by 1.46% and Thai Baht depreciated by 0.17%.