Australian Dollar (AUD) declined by 1.21% against the USD last week after Reserve Bank of Australia (RBA) minutes suggested that there is room on the downside for the currency. In its last meeting, RBA left its cash rate unchanged at 2% and issued a statement that its future monetary policy moves will be influenced by incoming data and financial conditions. AUD has declined by 10% since April 2015.
New Zealand Dollar (NZD) also called the Kiwi that has depreciated by 23% against the USD over the last one year, appreciated by 0.78% in the last week despite a rate cut by the Central Bank. Reserve Bank of New Zealand (RBNZ) on Thursday cuts its interest rate by 25 bps to 3%, which is still the highest amongst the developed economies. RBNZ began cutting rates in June in response to the troubles in the dairy market.
Tumbling commodity prices has taken its toll on the AUD and Kiwi as these economies are largely driven by commodity exports.
USD started the week on a high note and touched three month high levels on mounting expectations for a U.S. rate hike in the near future, which was fuelled by upbeat U.S. economic data. U.S. consumer price index rose 0.3% in the month of June, which was in line with expectations after 0.4% rise in the month of May and U.S. housing starts rose 9.8% to 1.174 million units in the month of June from a total of 1.069 million units in May against the expectation of 6.2% rise. Statement made by Fed Chair Janet Yellen in her testimony before the House Financial Services Committee continued to lend support to USD.
USD Index (DXY), which tracks the movement of the USD against six currencies, posted a decline of 0.63% last week as market sentiments improved after Greek lawmakers passed a second set of crucial reforms, paving the way for the country’s third bailout.
On Wednesday National Association of Realtors reported that U.S. existing home sales hit the highest level since 2007 in June adding to the rate hike expectations. U.S. existing home sales rose by 3.2% to 5.49 million units in the month of June from 5.32 million units in May against the expectation of a rise of 1.2% to 5.40 million units.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 18th July fell by 26,000 to 255,000 from the previous week’s total of 281,000 and against expectations of decline of 1,000 to 280,000.
USD pared its gain on Friday after the release of disappointing report on U.S. new home sales. U.S. new home sales declined by 6.8% in the month of June, which in unit terms declined at an annual rate of 482,000 from 517,000 in May and against the expectation of an increase of 546,000.
Euro appreciated by 1.42% against the USD last week due to improved market sentiments on Greece’s third bailout plan. European Union decided to release a short-term loan of 7.16 billion Euro to help Greece pay back a loan. Greece repaid all its arrear of 2 billion Euro to the IMF on Monday.
Greece lawmakers on Wednesday voted in favour of a second set of reforms signalling that negotiations on an 86 billion Euro bailout can begin.
Brazilian Real depreciated by 4.98% against the USD last week and touched its twelve year low levels. The major decline came on Wednesday after Brazilian Finance Minister Joaquim Levy announced on Wednesday that the government would slash its primary surplus target due to deteriorating tax revenues. The government’s target for its primary budget surplus was slashed to 0.15% of gross domestic product for 2015 from 1.1%, and the targets for the next two years were also reduced.
Russian Ruble depreciated by 2.08% against the USD as Brent crude oil prices declined by 3.42% on weekly basis from 57.1 USD/bbl to 55.15 USD/bbl.
Asian currencies were largely down against the USD last week. Australian Dollar declined by 1.21%, South Korean Won declined by 1.75%, Philippine Peso declined by 0.62%, Indonesian Rupiah declined by 0.70% and Thai Baht declined by 1.93%. Indian Rupee declined by 0.89% against USD and by 2.29% against Euro.