Aussie, Kiwi Underpinned by Increased Appetite for Risky Assets
The U.S. Dollar finished lower against most major currencies last week with the price action primarily driven by a strong recovery in the Euro. Economic data was scare last week so investors had to rely on headlines. Most of the headlines dealt with geopolitical events including this week-end’s G-7 summit, trade issues and President Trump’s upcoming meeting with North Korean leader Kim Jong-un on June 12.
June U.S. Dollar Index futures settled at 93.537, down 0.632 or -0.67%.
Japanese Yen
The Dollar/Yen finished higher last week as investors continued to react to rising Treasury yields and expectations that the U.S. Federal Reserve will raise interest rates 25 basis points this week. The Dollar/Yen was also pressured by strong demand for higher risk assets. Trading was light because economic reports were scare and the Fed speakers were in their quiet period.
Last week, the USD/JPY settled at 109.539, down 0.163 or -0.15%.
Australian Dollar
The Australian Dollar rose sharply early in the week, but the rally faded as investors reacted to not so friendly domestic economic data, trade war fears and the upcoming interest rate hike by the Fed. Aussie traders also expressed some concerns over renewed talk of problems in emerging markets.
The AUD/USD settled at .7598, up 0.0029 or +0.39%.
The week started with the Australian government reporting stronger than expected retail sales data. Retail Sales came in up 0.4% after coming in flat the month before. Traders were looking for a rise of 0.3%.
The Reserve Bank of Australia delivered a familiar message early in the week saying they were happy with the economy, but still not ready to make a move on interest rates. The RBA left its benchmark interest rate at 1.50% for the 20th consecutive meeting, the longest span in history. Additionally, investors priced in the chances of the next rate hike for November 2019.
Australian GDP came in at 1.0%, beating the 0.9% estimate. Additionally, 2017 fourth quarter GDP was revised upward to 0.5%. Prices spiked on the news, however, the rally stalled when investors realized that this type of growth would not be sustained.
The AUD/USD rally started to fade and the Forex pair ended the week with two-straight sessions of losses after the trade balance came in at 0.98 Billion. Although the number matched the estimate, it was still well below the upwardly revised previous report of 1.73 Billion.
New Zealand Dollar
The New Zealand Dollar posted a small gain last week. There were no major domestic reports so investors piggy-backed the rally in the Australian Dollar. Oversold conditions and increased demand for higher risk assets also drove the Kiwi higher.
The NZD/USD settled at .7030, up 0.0043 or +0.62%.
This article was originally posted on FX Empire
