The USD started the week on a high note on Fed’s scheduled release of July meeting minutes, which was expected to provide more clarity on Fed’s plans to hike interest rates. However, after the release of the Fed’s minutes on Wednesday, USD declined sharply by 2.09% as the minutes gave no clear indication of the timing of an interest rate hike. USD Index (DXY), which tracks the movement of the USD against six major currencies, managed to post a decline of 1.57% on weekly basis to close at levels of 95.01.
Russian Ruble led the global currencies decline on weekly basis by depreciating by 6.12% against the USD and touching its six-month low level. The currency has been hit hard by the decline in crude oil prices. Brent crude oil prices declined by 7.92% on weekly basis from 49.37 USD/bbl to 45.46 USD/bbl. Russia is also facing pain from Western sanctions imposed on Moscow over its role in the crisis in Ukraine.
Brazilian Real depreciated by 0.49% against the USD last week as the Brazil economic data reported on Thursday showed that the unemployment rate in Brazil rose to 7.5% in the month of June against the expectation of 7.1%. Unemployment rate was at 6.9% in June 2014.
Asian currencies were broadly down on worries of weak global economic growth outlook and declining commodity prices, which was hit hard by the slowdown in China. Australian Dollar depreciated by 0.85%, South Korean Won depreciated by 1.19%, Philippines Peso depreciated by 1.07%, Indonesia Rupiah decline by 1.11%, Malaysian Ringgit depreciated by 2.11%, Thai Baht depreciated by 1.35%, Indian Rupee depreciated by 1.25% against USD and by 4% against Euro. Whereas Chinese Yuan appreciated by 0.04%, New Zealand Dollar appreciated by 2.12% and Japanese appreciated by 1.86%.
Australian Dollar depreciated sharply on Friday after Caixin China Manufacturing PMI flash for August fell to 47.1, a 77-month low, against expectations of 47.7. Australian economy is hit hard by slowdown in China as it is one of the major export destination for Australian commodity exports.
Fed minutes showed that Fed officials believe the economy is nearing the point where interest rates should move higher and also noted that the subdued inflation outlook and weakness in the global economy could still pose risks to the U.S. economic outlook. Emerging market currencies, after the release of Fed minutes, were hit the most on mounting nervousness over global economic growth and commodity prices decline particularly crude oil prices, which declined 8% on weekly basis.
U.S. Commerce Department on Tuesday reported that U.S. housing starts rose to an almost eight-year high level in the month of July. Housing starts rose by 0.2% to 1.206 million units in the month of July against the expectation of 1.190 million units, it was 1.204 million units in the month of June.
U.S. Labour department on Wednesday reported that Consumer price inflation in the U.S. rose less than expected in the month of July while Core CPI rose modestly. CPI rose by 0.1% in the month of July against the expectation of 0.2% and following the rise of 0.3% in the month of June. Core CPI increased at annualized rate of 1.8% in the month of July, which was in-line with the expectation and unchanged from 1.8% in June.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 15th August rose by 4,000 to 277,000 from the previous week’s total of 273,000 and against expectations of a fall of 1,000 to 272,000.
Data released on Thursday showed that U.S. existing home sales rose more than expected in July to hit the highest level since 2007, boosting optimism over the health of the economy. Existing home sales rose by 2.0% to 5.59 million units in the month of July following 5.48 million units in the month of June, against the expectation of 0.6% decline to 5.44 million units.
Euro appreciated by 2.49% against the USD last week on broad USD weakness after the release of Fed minutes on Wednesday. The gain was also attributed to the Euro Bailout Deal for Greece as Euro-Area finance ministers signed off on a bailout program for Greece for USD 95 billion, enabling the nation to pay its bills and begin to rebuild its economy.