USD Index (DXY), which tracks the movement of the USD against six currencies was down by 0.63% in the last week. The USD remained under pressure due to the uncertainty over the timing of U.S. rate hikes after the Federal Reserve in its latest Policy meet downgraded its forecasts for growth and inflation. On Monday, USD declined by 0.89% but later recovered on the back of better U.S. economic data.
U.S. existing home sales rose by 1.2% to 4.88 million units in the month of February from 4.82 million units in January against expectations of 1.7% rise to 4.90 million units. As per the Commerce Department report released on Tuesday, U.S. new home sales rose by 7.8% to 539,000 units in the month of February, which is the highest reading since February 2008.
U.S. consumer prices rose by 0.2% in February, which was in line with expectations, after a decline of 0.7% in January. Core inflation (excludes food and energy costs) declined by 0.2% in February after 0.2% gain in January. On yearly basis core inflation rose by 1.7%, which is the largest increase since November.
The major gain for the USD during the last week came after the release of initial jobless claims data, which helped USD to pare its early week losses. U.S. Department of Labour in its report said that number of individual filing for initial jobless claim in the week ending 21st March declined by 9,000 to 282,000 from the previous week’s total of 291,000 against the expectation of decline by 1000 to 290,000.
On Friday USD extended its loss after the release of disappointing U.S. fourth quarter GDP data. U.S. Bureau of Economic Analysis in its report said that fourth quarter GDP rose by 2.2%, below the expectations of a growth of 2.4%.
USD will take its cue from monthly job data report for March as strength in labour market will determine June rate hike by the Fed.
Euro appreciated by 0.63% in the last week against the USD after Greek authorities said that they are moving towards meeting the requirements of international creditors on a more detailed reform plan in order to secure the additional bailout funds, which is required to prevent the country’s bankruptcy. Greece has submitted its reform proposal to the Eurozone creditors where they have mentioned 18 reforms.
Euro also gained ground after Markit said that its composite purchasing managers index, which measures the activity in the manufacturing and services sectors, rose to 54.1 in March from 53.3 in February, which is the highest reading since 2011.
Brazilian Real depreciated by 0.58% against the USD last week and on yearly basis it has depreciated by 30.49%. The decline came after Central Bank of Brazil announced that they will end their forex intervention program by the end of March.
Russian Ruble appreciated in the last week by 2.5% against the USD. Major gains came on Thursday due to surge in crude oil prices by 2.58% as the Yemen conflict escalated, which has raised concerns over the security of oil shipments from the Middle East. Crude oil prices on weekly basis were up by 1.97% (Crude Oil (Brent) is at 55.32 USD/bbl). Russian Tax season was already giving support to the currency as companies are rushing to buy up Ruble in exchange for foreign currency.
Asian currencies last week were up on a broad pull back in the USD. Japanese Yen appreciated by 0.76%, South Korean Won appreciated by 1.77%, Philippines Peso appreciated by 0.38%, Indonesian Rupiah appreciated by 0.45%, Indian Rupee appreciated by 0.08% whereas Australian Dollar declined by 0.3% and Chinese Yuan declined by 0.18%. The INR declined by 0.97% against the Euro.