USD last week strengthened against major currencies on statement made by Fed chair Janet Yellen suggesting that the Fed expects to start raising interest rates later this year, if the economy continues to improve as expected. The statement was well supported by a string of upbeat U.S economic data, which indicate that the economy is gaining momentum after a slowdown in the first quarter. USD Index (DXY), which tracks the movement of the USD against six currencies, posted a gain of 0.91% last week
US inflation data release on 22nd May, has given additional boost to the USD as it grew for the third straight month in April by 0.1% from 0.2% in March, which was in line with expectations.
U.S. Commerce Department report released on Tuesday showed that total durable goods orders declined by 0.5%, which was slightly more than expectations of 0.4% decline. However core durable goods orders rose by 0.5% in April better than expectations of 0.4% rise.
U.S. Commerce Department also reported that U.S. new home sales rose by 6.8% to 517,000 units in April against the expectation of 5% and 510,000 units, 484,000 units were reported in March.
Conference Board reported that U.S. consumer confidence improved more than expected in May as reading rose to 95.4 against the expectation of 94.9.
USD pared part of its gains after the release of weak U.S. jobless claims report and U.S. first quarter GDP report. U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 23rd May rose by 7,000 to 282,000 from the previous week’s total of 274,000 and against expectations of a rise of 5,000 to 270,000.
U.S. Bureau of Economic Analysis reported that U.S. first quarter GDP contracted by 0.7% compared to expectations of 0.8% decline, whereas in the last quarter U.S. economy grew by 0.2%.
Euro last week marginally declined by 0.25% against the USD. Euro strengthened in the early part of the week after ECB President Mario Draghi in a conference stated that ECB’s policies have helped the Eurozone’s economy to recover. He also raised concerns over probable Greece default as the negotiations between Greek, French and German government leaders last week ended without any breakthrough.
Brazilian Real depreciated by 2.66% against the USD after Brazil reported weak economic data. Brazil GDP contracted by 0.2% in the first quarter of 2015 compared to same quarter last year. Household consumption fell 1.5% in the first quarter of this year, compared to the last quarter of 2014.
Russian Ruble depreciated by 4.47% against the USD. Ruble came under pressure after USD surged in the early part of the week, which put downward pressure on oil prices. Brent Crude oil in the last week declined by 2.88%. Ruble was also under pressure as Russian central bank was selling Ruble to manage the exchange rate as earlier in the month the bank gave market the signal that the currency had become too strong by announcing that it would start buying USD 100 million to USD 200 million per day in order to grow reserves.
Asian currencies were down against the USD last week. Australian Dollar declined by 2.28%, Japanese Yen declined by 2.1%, South Korean Won declined by 1.63%, Philippines Peso declined by 0.08%, Indonesia Rupiah declined by 0.5%, Thai Baht declined by 0.65% whereas Chinese Yuan remained flat.
Indian Rupee declined by 0.48% against the USD and appreciated by 0.55% against the Euro. Apart from broad USD strength, INR decline because of month-end dollar demand from importers