USD started last week on a strong note on growing expectations of a Fed rate hike despite the U.S. GDP data, which showed that the economy contracted in the first quarter by 0.7% against the initial Commerce Department forecast of 0.2% growth. However the data was still better than the market expectations of 1% contraction. During the week the USD pared its early week gains after the release of weak U.S. factory data and rising positive expectation on Greece debt deal. USD Index (DXY), which tracks the movement of the USD against six currencies, posted a gain of 0.6% last week.
On Monday, U.S. reported stronger than expected manufacturing activity and construction spending data. U.S. manufacturing activity in the month of May rose to 52.8 from 51.5 in April against the expectation of 52. Construction spending rose by 2.2%, the growth rate was the highest since May 2012. Consumer spending remained unchanged in April against the expectations of 0.2% rise.
USD started its decline on Tuesday after the release of U.S. factory data. U.S. factory orders declined for the sixth straight month in April, declining by 0.4% against expectations of 0.2% rise while previously reported decline was 2.2%.
ADP on Wednesday reported that non-farm private employment rose by 201,000 in May against the expectations of an increase of 200,000. U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 30th May declined by 8,000 to 276,000 from the previous week’s total of 284,000 and against expectations of a fall of 5,000 to 279,000.
On Friday U.S. Labour department reported that non-farm payrolls increased by 280,000 in the month of May against expectations of 225,000 while previously reported figure was 221,000. Unemployment rate rose to 5.5%, from 5.4% seen in April.
U.S. Bureau of Economic Analysis reported that U.S. trade deficit narrowed to USD 40.88 billion in April from a revised deficit of USD 50.57 billion in March against the expectation of U.S. trade deficit to narrow to USD 44 billion.
Euro last week appreciated by 1.17% against USD as Eurozone consumer price index rose by 0.3% from a year earlier in May, following a flat reading in April against expectations of an increase of 0.2%. Greece has postponed a payment of 305 million euro to the International Monetary Fund that was to be made on 5th June, stating that it would bundle all the payments due this month into one, which means that Greece will have to make payment of USD 1.54 billion by 30th June.
Brazilian Real appreciated by 1.16% against the USD due to rising expectations of interest rate hike by Brazilian central bank.
Russian Ruble depreciated by 6.47% against the USD and touched its two month low level. Ruble came under pressure after central bank of Russia said that it would keep on buying foreign exchange to build reserves and indicated that the bank wants to boost forex reserves by USD 140 billion in the next few years to take reserves to USD 500 billion. Declining oil prices continued to put pressure on the currency as Brent crude declined by 3.5% last week from the level of 65.56 USD/bbl to 63.31 USD/bbl.
Asian currencies were down against the USD last week. Australian Dollar declined by 0.29%, Japanese Yen declined by 1.18%, South Korean Won declined by 0.27%, Philippines Peso declined by 0.64%, Indonesia Rupiah declined by 0.5%, Thai Baht declined by 0.62% and Chinese Yuan declined by 0.08%. Indian Rupee appreciated by 0.11% against the USD and depreciated by 2.39% against the Euro.