Weekly Forex Roundup: Mixed Movements Against EUR, GBP, AUD, INR, CAD, SGD

This week saw the US dollar decline by 0.05% against a basket of six major currencies, following a three-week gain streak of 0.10%. On Friday, the US Dollar Index (DXY) mirrored this decrease, also falling by 0.05%, and closed at 104.486.

In the economic landscape, new home sales underperformed against expectations, while core durable goods orders remained stable. Durable goods orders surpassed estimates, but the S&P/CS Composite-20 HPI stayed unchanged. The Richmond Manufacturing Index saw a downturn, and consumer confidence, as measured by the CB Consumer Confidence Index, was weaker than expected. In contrast, crude oil inventories exceeded forecasts, and GDP growth pleasantly surprised to the upside at 0.6%, although unemployment claims held steady.

At the Macroeconomics and Monetary Policy Conference, Federal Reserve Chair Jerome Powell conveyed a positive outlook on the economy. He emphasized the upward trend in core inflation and projected it would reach 2%. Powell mentioned that interest rates would stay the course unless the current economic trajectory shifts, suggesting no immediate pressure to reduce rates despite the Personal Consumption Expenditures (PCE) inflation aligning with the 2.5% forecast.

Powell confidently noted, “Growth is strong. The economy is in a good place. There is no reason to think the economy is in a recession or is at the edge of one.”

USD/EUR Weekly Update

The USD to EUR exchange rate gained this week by +0.15% and with +0.76% gained on the last week. However, the exchange rate lose on Friday with -0.04%, and it closed the day at 0.9263.

German consumer confidence and retail sales fell, but Italian bond auctions remained constant. French consumer spending and CPI fell, while Italian CPI remained stable.

German unemployment improved somewhat, while French CPI fell. These factors had an impact on the USD/EUR exchange rate this week. The decrease in German retail sales encouraged speculation about ECB rate reduction, in contrast to Fed leaders’ reluctance to cut rates.

Meanwhile, on Saturday, ECB Governing Council member Robert Holzmann stated that “Europe could cut interest rates before the U.S.” These comments from Holzmann added some pressure on Euro and kept USD to EUR exchange rate higher this week.

USD/GBP Weekly Update

The USD to GBP exchange rate fell down this week by -0.21% and by +1.07% gained on the last week. However, on Friday, the USD to GBP exchange rate fell down with -0.03% and closed at 0.79197. 

On Monday, CBI Realized Sales data was issued with a positive actual reading of 2, while the expected value was -13.On Thursday, current account data was provided with a consistent value of -21.2 billion. On the same day, Final GDP q/q was announced at a constant rate of -0.3%.On March 28, Revised Business Investment q/q figures were issued, with a constant value of 1.4%.

The GBP rose slightly as US PCE numbers exceeded expectations, with inflation at 2.5% yearly. Core PCE, which excludes food and energy, also increased as expected.

Furthermore, the Bank of England (BoE) kept its interest rate at 5.25%, hinting at possible rate reduction later this year.

Bank of England policymaker Catherine Mann said on Tuesday:

“I think they’re pricing in too many cuts, that would be my personal view.” She mentioned the financial markets, which are nearly fully anticipating three quarter-point rate cuts by the Bank of England this year.

USD/CAD Weekly Outlook

The USD to CAD exchange rate fell down this week by -0.50% after gaining +0.49% on the last week. Also, on Friday, the USD to CAD exchange rate closed the week at 1.35359 by loss of about -0.03%.

On Thursday, GDP m/m data was revealed with a positive actual reading of 0.6% versus the predicted 0.4%. Despite positive Canadian GDP data, the CAD has remained constant due to concerns over poor productivity. Meanwhile, the US dollar rose on prospects of delayed Fed rate cuts, boosted by good US GDP and inflation figures.

The Bank of Canada’s cautious approach on interest rate decreases, combined with prospective policy moves, might have an impact on the currency rate.

Meanwhile, OPEC+ unveiled that it was unlikely to adjust output before June. However, still, Canadian Dollar gained strength based on rising prices of Crude oil this week by +2.87%. Crude Oil has been on the winning streak for past 3 weeks and supporting Canadian Dollar, as Canadian economy is majorly reliant on the Oil exports. Thus, the USD to CAD exchange rate remained lower this week.

USD/AUD Weekly Outlook

The USD to AUD exchange rate fell down by -0.10% this week and gained by +0.70% on the last week. The USD to AUD exchange rate loss by -0.08% on Friday after closing its day at 1.5329. 

On Australian economic docket, Westpac Consumer Sentiment held constant at -1.8%. The MI Leading Index remained unchanged at 0.1%. The year-on-year CPI fell short of estimates at 3.4%. MI inflation expectations stayed unchanged at 4.3%. Retail Sales fell by 0.3%. Private sector credit increased by 0.5%.

Because of Australia’s close trading links with China, Chinese economic developments can have an impact on the Australian dollar. In March, the Caixin/S&P Global China manufacturing purchasing managers’ index reached 51.1, marking its strongest performance since February 2023, following a reading of 50.9 in February. This helped AUD gain strength against the greenback and kept USD to AUD exchange rate lower this week.

USD/INR Weekly Update

Unlike other currencies, the USD to INR exchange rate fell down this week by -0.21% and gained  by +0.78% last week. On Friday, the INR remittance rate fell down by 0.01% and closed the market at 83.3400.

The Indian rupee (INR) may increase somewhat versus the US dollar (USD) as a result of the RBI’s intervention and good economic indicators. Despite international concerns and USD demand, the INR stays stable. However, the Fed’s certainty on rate cuts may influence the INR’s trajectory.

India’s substantial foreign reserves and GDP growth forecast supported the INR’s prognosis. According to Indian Finance Minister Nirmala Sitharaman, the country’s GDP was on track to grow about 8% or more in the Q1 of 2024. Furthermore, S&P Global expects RBI rate reduction by 75 basis points in 2024 – 2025, which added further volatility in the market.

USD/SGD Weekly Outlook

The USD to SGD exchange rate gained by 0.06% by this week and gained by 0.85%   on the last week. On Friday, the Singapore dollar exchange rate gained by -0.04% and closed at 1.34974.

Despite the weakness in USD this week, the USD to SGD exchange rate remained on the positive note. This week, Deutsche Bank successfully raised 400 million SGD in senior non-preferred notes, diversifying its investor base and extending its funding activities. This marks its second visit to the SGD market, indicating confidence in the currency and market.

The transaction received strong demand from investors in Asia Pacific and abroad, leveraging a positive market environment. Overall, it was a positive development for the SGD currency, signaling confidence in its stability and attractiveness to investors.

Conclusion

Over the week, the USD exhibited mixed performance against major currencies. It strengthened against the EUR, indicating a positive momentum, but weakened against the GBP, AUD, and INR, reflecting challenges in these economies. Notably, the USD gained against the SGD, signifying confidence in Singapore’s economic stability.

The US dollar slightly declined by 0.05% against a basket of six major currencies, following three weeks of modest gains. The US Dollar Index (DXY) decreased by 0.05% on Friday, closing at 104.486.

Economic indicators showed mixed signals: New home sales were below expectations, core durable goods orders remained stable, and Durable Goods Orders exceeded estimates. The S&P/CS Composite-20 HPI was unchanged, the Richmond Manufacturing Index declined, and CB Consumer Confidence was weaker than expected. Conversely, Crude oil inventories were higher than anticipated, and GDP growth exceeded expectations at 0.6%.

Federal Reserve Chair Jerome Powell, at the Macroeconomics and Monetary Policy Conference, expressed optimism about the economy, noting core inflation gains and predicting a steady interest rate environment unless economic scenarios change.

In currency specifics, the USD/EUR rate ended the week positively, influenced by weaker economic indicators in Europe, hinting at potential ECB rate cuts before the Fed. The USD/GBP fell, affected by strong UK economic data and inflation rates. The USD/CAD rate dropped, despite positive Canadian GDP figures, due to persistent concerns over productivity and oil price fluctuations.

The USD/AUD rate decreased, reflecting Australia’s economic ties with China and the latter’s manufacturing performance. The USD/INR fell, with RBI interventions and economic indicators suggesting a stable yet volatile market. Lastly, the USD/SGD rate slightly increased, supported by positive developments in the Singapore financial market.