USD remained broadly lower as recently released weak economic data suggested slow economic recovery in the U.S. The US economy is raising concerns over the timing of the first rate hike by the Fed. In its monthly statement, Fed acknowledged the recent weakness in the economy and said that this was due to transitory factors. However Fed also said that it will take into account labour market conditions, inflationary pressures and expectations of international financial developments when it decides on the timing of a rate increase.
USD Index (DXY), which tracks the movement of the USD against six currencies, posted a decline of 1.76% in the last week. On yearly basis USD has strengthened by 19.73%.
USD declined after data showed that U.S. GDP growth slowed sharply as the economy grew by 0.2% in the first quarter of 2015, slowing from 2.2% as of 2014 last quarter. Growth data came in after the U.S. Conference Board on Wednesday reported that index of consumer confidence fell to 95.2 in April from a reading of 101.4 in March. USD found some support after U.S. Jobs data showed that jobless claims fell to a 15-year low in the week ended 25th April.
U.S. Department of Labour on Thursday reported that initial jobless claims for the week ended 25th April decreased by 34,000 to 262,000, from the previous week’s total of 296,000 and against the expectations of decline of 6,000 to 290,000.
Euro appreciated by 3% in the last week against the USD. Euro started the week on a low note as Eurozone finance minister asked Greece to present a full economic reform plan by early May in order to access any further funding. Greek Prime Minister Alexis Tsipras reshuffled the team that is handling talks with the lenders and has raised expectations that a deal will be reached by early May, which helped Euro to gain.
Brazilian Real continued its winning streak for the fifth successive week as the currency advanced by 1.54% against the USD last week. Real gained on the speculation that Central Bank of Brazil will raise borrowing costs by 50bps this week, making local assets more attractive to international investors.
Russian Ruble depreciated by 2% against the USD after Bank of Russia cut interest rates by 150bps on Thursday for the third time this year from 14% to 12.5% and indicated further rate cuts in order to stimulate economy if inflation slows.
Asian currencies were mixed against the USD last week. Australian Dollar appreciated by 1.96%, Japanese Yen appreciated by 0.7%, Philippines Peso appreciated by 0.17% and Indian Rupee appreciated by 0.22% but declined by 2.83% against the Euro. South Korean Won declined by 0.2%, Indonesia Rupiah declined by 0.25%, Chinese Yuan declined by 0.73% and Thai Baht declined by 0.15%.
Australian Dollar gained as CPI data released on Wednesday matched expectations. CPI for the first quarter rose by 0.2%, and on annual basis, CPI gained 1.3%. Japanese Yen declined marginally despite March trade data showing a surplus of USD 1.9 billion. Exports rose 8.5%, matching expectations and imports declined 14.5%.
The INR last week gained by 0.22% against the USD as disappointing U.S. economic data increased expectations that the Fed will not hike interest rates soon. In the early part of the week, INR came under pressure because of month-end demand for USD from importers but later recovered after US GDP data release.