USD declined last week due to mixed U.S. economic data and weak US non-farm payroll report. In the early part of the week, USD found strong support after the Fed Chair Janet Yellen stated that rate hike is warranted during the latter part of the year but raised concerns over weakening inflation pressures.
USD trimmed its early week gains as Friday’s US monthly job report disappointed the market. USD Index (DXY), which tracks the movement of the USD against six currencies was down by 0.77% in the last week.
U.S. National Association of Realtors reported on Monday that pending home sales rose 3.1% last month, surpassing the expectations for a 0.4% gain. In the month of January, pending home sales rose by 1.2%. U.S. Commerce Department reported that personal spending declined 0.1% last month, below the expectations of 0.2% gain, after declining by 0.2% in January. Personal income rose by 0.4% in February, above the expectation of 0.3% increase, after gaining by 0.4% in January.
On Wednesday, Institute for Supply Management reported that its index of purchasing managers fell to 51.5 last month from a reading of 52.9 in February against the expectation of decline to 52.5. ADP on Wednesday reported that non-farm private employment rose by 189,000 last month, below expectations for an increase of 225,000.
On Thursday, U.S. Department of Labour reported strong initial jobless claims data with number of individuals filing for initial jobless benefits in the week ending 28th March declining by 20,000 to 268,000 from the previous week’s total of 288,000 against the expectation of a fall by 3,000 to 285,000. On Friday US non-farm payroll report showed that employment increased by just 126,000 in March, which was well below the 247,000 forecast, while the unemployment rate was unchanged at 5.5%.
In a separate report U.S. Bureau of Economic Analysis reported that the U.S. trade deficit narrowed to USD 34.44 billion in February from USD 42.68 billion in January against the expectation of USD 41.2 billion.
Asian currencies last week were up against USD. Japanese Yen appreciated by 0.13%, South Korean Won appreciated by 0.94%, Philippines Peso appreciated by 0.75%, Indonesian Rupiah appreciated by 0.35%, Chinese Yuan appreciated by 0.34% Thai Baht appreciated by 0.5% whereas Australian Dollar declined by 1.54% and Indian Rupee declined by 0.13%. The INR declined by 0.92% against the Euro. The INR will strengthen against the USD on the back of weak US job numbers that suggest the Fed deferring rate hikes.
Euro appreciated by 0.73% in the last week against the USD. Investors were cautious about the approval of new reform plan submitted by Greece in order to receive additional bailout package after earlier proposals were not accepted. Euro gained majorly during the latter part of the week as USD came under pressure after the weak job numbers.
Brazilian Real lead the emerging currencies gains as it appreciated by 4.06% against the USD last week as President Dilma Rousseff signalled a fiscal consolidation program. President Dilma Rousseff in an interview affirmed a commitment to do what it takes to meet fiscal targets, fuelling speculation that the country will be able to avoid junk credit rating. Finance Minister Joaquim Levy also stated that he is committed to improve fiscal accounts and signalled huge spending cuts after the country posted unexpected deficit data.
Brazil posted a USD 712 million primary deficit in the month of February whereas in January there was a primary surplus of USD 653 billion.
Russian Ruble appreciated in the last week by 2.08% against the USD. Major gains came on Thursday on the back of strong rise in oil prices. The currency also also gained from weak US jobs report. Crude oil prices on weekly basis were down by 0.67% (Crude Oil (Brent) is at 54.95 USD/bbl).