Last week saw the US Dollar slowly but surely grind its way higher against all its Rivals. At the close of New York trade on Friday (Saturday morning, Sydney), the Dollar Index (USD/DXY), a favoured gauge of the Greenback’s value against a basket of 6 major currencies settled at 95.70 against last week’s close of 95.10.
The catalyst was a rise in the US June Consumer Price Inflation to 0.9% from a previous 0.6%, beating analyst’s expectations of 0.4%. US Treasury bond yields ended lower. The benchmark US 10-year bond yield closed at 1.29% on Friday, against 1.36% last week.
The week also saw interest rate decisions from the Reserve Bank of New Zealand and the Bank of Canada. The RBNZ announced it was ending its bond buying program effective 23 July and signalled a shift toward a rate rise. Which was unexpected and saw a big move in the NZD/USD and NZD/AUD.
NZD to AUD at 0.9459 has risen 1.6% above its 90-day average, range 0.9231-0.9459.NZD/AUD
In contrast the BOC, as was widely anticipated, reduced the target of its weekly bond purchase, and left its interest rate unchanged. The US Dollar eased off its highs after Fed Chair Jerome Powell stressed that monetary policy would continue to offer powerful support to the economy.
Infections of a third wave of the contagious Covid-19 Delta variant continued to climb around the globe. Which led to haven-support for the US Dollar.
Rate Trends Last Week
USD/JPY – had a choppy trading week, hitting a peak at 110.70 as well as a low at 109.71. The Greenback closed on Friday at 110.08, surprisingly little changed from last week’s close of 110.12. Risk appetite was the main driver of this currency pair. Breaking with tradition the USD/JPY traded independently from the US 10-year bond yield this past week.
EUR/USD – The Euro, in contrast with the Japanese Yen, had a more subdued trading week. The shared currency finished the week lower, settling at 1.1805 (1.1877 last Friday). Overall range for the Euro was between 1.1772 and 1.1881. There were no major Eurozone events or data last week. The EUR/USD was a function of the US Dollar.
AUD/USD – The Australian Dollar finished lower against the Greenback and had some volatile sessions during the week. The AUD/USD pair slid to close lower on Friday at 0.7399 (0.7492 last Friday). Weekly range for the Aussie Battler was 0.7386 (low) and 0.7496 (high). A rise in the delta variant of Covid 19 cases in both Sydney and Melbourne saw both cities locked down, affecting 10 million people.
GBP/USD – Sterling got pounded hard against the US Dollar due to mostly weaker economic data released last week. The UK’s Production Price Index (PPI) for both Input and Output fell and missed estimates. The overall stronger US Dollar also weighed on the British currency. GBP/USD slumped over 1% to close at 1.3765 from its 1.3902 finish last week. Weekly…
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