Greece has left the door wide open for exiting the Euro after its Prime Minister Alexis Tsiprias rejected its creditors bailout proposals and called for a referendum this week. The Euro depreciated last week breaking its gaining streak that saw it climb from Euro 1.05 to the USD to Euro 1.13, on broad USD strengthen and on faltering of Greek cash-for-reforms deal. Euro closed last week at Euro 1.1167 to the USD and is likely to trend down on Grexit issues.
USD Index (DXY), which tracks the movement of the USD against six currencies, posted a gain of 1.47% last week. USD gained on rising expectations of interest rate hikes by Fed in the later part of the year after the statement made by Federal Reserve Governor Jerome Powell, who said that he was prepared to raise interest rates twice this year, which was later supported by the release of some upbeat economic data.
On Monday National Association of Realtors reported that U.S. existing home sales rose more than expected in May to hit the highest level since 2009. Data shows that existing home sales rose by 5.1% to a seasonally adjusted level of 5.35 million units in May from 5.09 million in April against the expectation of rise of 4.4% to 5.26 million units.
On Tuesday U.S. Commerce Department reported that U.S. new home sales rose more than expected in May to hit the highest level since February 2008. Data shows that new home sales rose by 2.2% to a seasonally adjusted level of 546,000 units in May from 534,000 units in April against the expectation of a rise of 1.5% to 525,000. Report also showed that U.S. durable goods orders fell more than expected in May as data revealed that total durable goods orders declined by 1.8% in May against the expectation on 0.6% decline. Core durable goods orders rose by 0.5% in May against the expectation of a rise of 0.6%.
U.S. Commerce Department on Wednesday reported that U.S. economy contracted less than initially expected in the first quarter. Data showed that GDP contracted at an annual rate of 0.2% in Q1 against the initial expectation of 0.7% contraction.
U.S. Commerce Department reported that Personal spending rose more than expected in the month of May by 0.9% against the expectation of a rise of 0.7%. Core PCE index rose by 0.1% in May in line with expectations and it rose by 1.2% at an annualized rate. Fed uses Core PCE index as the main gauge to measure inflation in the economy.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 20th June rose by 3,000 to 271,000 from the previous week’s total of 268,000 and against expectations of rise of 4,000 to 272,000.
Russian Ruble depreciated by 1.41% against the USD as monthly tax deadlines subsided and investors turned their attention to the Bank of Russia USD purchases and companies foreign debt payments. Bank of Russia has bought almost USD 5 billion in the market since 13th May in order to boost its foreign currency reserves to USD 500 billion from USD 361 billion at present. As per reports, companies in Russia has USD 17.9 billion of foreign debt payments outstanding in June and July.
Asian currencies were largely down against the USD last week due to broad strengthening of USD. Australian Dollar declined by 1.51%, Japanese Yen declined by 0.92%, South Korean Won declined by 0.84%, Thai Baht declined by 0.38% whereas Philippines Peso marginally rose by 0.02%, Indonesia Rupiah rose by 0.18%. Indian Rupee depreciated by 0.13% against USD and appreciated by 1.72% against Euro.