Weekly Currency Transfer Roundup – February 05, 2024

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Welcome to this week’s currency roundup! The US Dollar has been on the up, rising by 0.44% against a mix of major currencies, and even saw a notable increase of 0.88% on Friday, bringing the Dollar Index (DXY) to 103.964.

What’s behind the Dollar’s climb? A big factor was Tuesday’s reveal that US Consumer Confidence hit its highest point since December 2021, showing folks are feeling pretty optimistic. Job openings in the US also beat expectations, adding more muscle to the Dollar. However, unemployment claims were a tad higher than anticipated, which took some wind out of the Dollar’s sails. But then, manufacturing data came out stronger than expected, and wages saw a nice jump on Friday – double what was predicted. Plus, a huge leap in non-farm jobs gave the Dollar a solid boost, and a slight drop in the unemployment rate didn’t hurt either.

Yet, the Federal Reserve’s latest meeting added some spice to the mix, deciding not to change interest rates and hinting that it’s too soon to think about rate cuts, even with inflation easing. Fed Chairman Jerome Powell’s words gave the Dollar an extra edge, emphasizing caution over rate cuts. So, there you have it: a week of highs and a careful watch on rates, all adding up to a stronger Dollar.

Euro Update: Dollar Climbs Higher Against the Euro Amid Positive Trends

This week, the Dollar to Euro (USD to EUR) rate continued its upward trend for the third consecutive week, increasing by about 0.60%. It even hit an eight-week high of 0.9274, wrapping up Friday with a 0.76% gain to close at 0.9265.

Economic reports from Spain, Germany, Italy, and the broader Eurozone came in stronger than expected, giving the Euro a boost. Notably, Germany’s Consumer Price Index (CPI) showed a 0.2% rise, surpassing forecasts. However, European Central Bank (ECB) President Christine Lagarde has been cautious about cutting interest rates soon, focusing on upcoming wage data to guide easier monetary policies, potentially delaying the first rate reduction to mid-2024.

Despite positive signals for the Euro, the Dollar’s strength across the board, fueled by optimistic employment data and anticipations of a Fed rate cut, pushed the USD to EUR rate higher. For folks looking to exchange or send money, the stronger Dollar means now might be a good time to convert USD to EUR, as you could get more Euros for your Dollars.

GBP: Dollar Strengthens Against Pound Amid Economic Updates

The Dollar to Pound (USD to GBP) exchange rate climbed again this week by +0.56%, marking three consecutive weeks of gains. By Friday, it had increased by +0.89%, closing at 0.79170. Without significant economic news from the UK, the exchange rate’s rise was primarily driven by the stronger Dollar and the Pound’s relative weakness.

Minor reports from the UK, like Mortgage Approvals and lending figures, put some pressure on the Pound early in the week. However, a positive housing price index report showing a 0.7% rise, more than expected, offered some support. Despite this, the Bank of England’s decision on February 2nd to keep interest rates steady at 5.25% — a move mirroring the Federal Reserve’s cautious stance on inflation — contributed to the Dollar’s advantage over the Pound.

For those sending money from the UK to the US or exchanging GBP to USD, the Dollar’s continued strength means you might get fewer Dollars for your Pounds. This week’s developments underscore the impact of central bank decisions and economic indicators on exchange rates.

CAD: Dollar’s Steady Climb Against the Canadian Dollar

The Dollar to Canadian Dollar (USD/CAD) exchange rate continued its upward trend, gaining +0.14% this week, marking its fifth consecutive week of increases. By Friday, it had surged by +0.58%, closing at 1.34640.

• Canada’s GDP: Grew by 0.2% in December, slightly better than the expected 0.1%. Despite this growth, the Canadian Dollar struggled to match the US Dollar’s strength.

• Bank of Canada’s Caution: Governor Tiff Macklem advised against big spending increases in the upcoming budget to control inflation. The Bank aims to reduce rates when inflation eases but remains cautious.

• Impact of Oil Prices: Crude Oil prices fell by -7.44% to $72 per barrel, influenced by potential peace talks in the Middle East. This drop affected the Canadian Dollar, contributing to the USD/CAD rate’s rise.

For individuals looking to exchange USD for CAD or sending money between the two countries, this week’s trends suggest that now could be a favorable time to exchange, as the Dollar strengthens against the Canadian Dollar.

AUD: Aussie Faces Downward Pressure Amid Economic Pressures and China’s Slowdown

This week, the US Dollar gained against the Australian Dollar, continuing a 5-week climb and closing up by 0.98%. On Friday alone, the USD to AUD rate increased by 0.90%, ending the day at 1.5349.

• Inflation Data: Australia’s inflation rate came in lower than expected, which puts pressure on the Australian Dollar:
  • Quarterly CPI was 0.6%, below the forecasted 0.8%.
  • The Trimmed Mean CPI, an important measure of core inflation, was 0.8%, under the predicted 0.9%.
  • Yearly CPI growth was 3.4%, less than the expected 3.7%.

• Other Economic Reports: Negative releases in quarterly Producer Price Index (PPI) and Building Approvals last month further weakened the AUD.

Influence of China’s Economy:

• The Australian Dollar is closely tied to China, its biggest trading partner.
• A recent IMF report predicts a slowdown in China’s GDP growth from an estimated 5.4% last year to 4.6% in 2024, with a potential drop to 3.4% by 2028.

With the USD strengthening against the AUD, now might be a favorable time to convert US Dollars to Australian Dollars, as you could receive more AUD for each USD. If you’re sending money to Australia, the stronger USD means your dollars will go further, giving recipients more AUD for the same amount of USD.

INR: Rupee Hits Six-Week High as Economic Optimism Fuels Strength

This week, the USD to INR exchange rate slightly fell by -0.15%, marking a shift after last week’s modest gain. By Friday’s close, the rate declined further by -0.09%, settling at 82.9790, showcasing the Indian Rupee’s resilience.

• India’s Growth Outlook: India’s Chief Economic Advisor, V Anantha Nageswaran, predicts a robust 7.4% economic growth for FY24, underscoring a stable economic environment.

• Interim Budget Announcements: Finance Minister Nirmala Sitharaman’s budget proposals aim to enhance farmer incomes, cervical cancer prevention, and governance, providing a positive outlook for India’s economy.

• IMF’s Growth Projection: The International Monetary Fund adjusted its growth forecast for India, expecting a 6.7% expansion in FY24, further bolstering confidence in India’s economic trajectory.

Despite a dip in foreign currency reserves, India’s positive economic developments and growth forecasts have propelled the Rupee, challenging the USD’s dominance and impacting exchange rates favorably for the INR.

The Indian Rupee’s strength means you might get fewer Rupees for your Dollars compared to recent weeks. The Rupee’s performance, being the best in Asian markets this January, suggests a slight decrease in value received from remittances in INR.

SGD: Riding the Waves of MAS Policies and US Dollar Dynamics

The USD to SGD exchange rate saw another week of increase, marking a 5th consecutive week of gains with a modest +0.11%. However, the Singapore dollar made a notable move on Friday, appreciating by 0.46%, and ending the day at 1.34275.

• MAS’s Steady Hand: The Monetary Authority of Singapore (MAS) has decided to keep its current monetary policies unchanged. MAS has announced it will provide quarterly updates on its policy stance starting this year.

• Economic Growth Outlook: The MAS is optimistic about Singapore’s economy, projecting growth between 1% and 3% for 2024. This positive outlook is expected to bring broader economic expansion.

• Inflation and Tax Impact: Although the goods and services tax hike in January initially pushed the MAS Core Inflation higher, a gradual decline in inflation rates is expected throughout the year. Core inflation rates are forecasted to average between 2.5% and 3.5% in 2024, not accounting for the tax increase’s effects.

Despite the Singapore dollar finding occasional support from MAS’s optimistic economic projections and policy stability, the overarching strength of the US dollar ultimately pushed the exchange rate to higher levels by week’s end. Individuals exchanging USD to SGD might find the Singapore dollar gaining some ground, especially with MAS’s positive economic outlook. However, the US dollar’s recent strength has influenced the exchange rate to reach a 10-day high. The week’s movements suggest a slight fluctuation in value, offering a momentary advantage for sending money to Singapore at the week’s end due to the SGD’s appreciation against the USD.

Weekly Currency Event Highlights

AUD (Australian Dollar):

• Monday, Feb 5:
  • 0:00 – MI Inflation Gauge m/m: 1.0%
  • 0:30 – ANZ Job Advertisements m/m: 0.1%
  • 0:30 – Goods Trade Balance: 10.51B (Prev: 11.44B)
• Tuesday, Feb 6:
  • 3:30 – Cash Rate: 4.35%
  • 3:30 – RBA Rate Statement & Monetary Policy Statement
  • 4:30 – RBA Press Conference
• Thursday, Feb 8:
  • 22:30 – RBA Gov Bullock Speaks

CAD (Canadian Dollar):

• Tuesday, Feb 6:
  • 13:30 – Building Permits m/m: 1.2%
• Wednesday, Feb 7:
  • 13:30 – Trade Balance: 1.1B
• Friday, Feb 9:
  • 13:30 – Employment Change: 15.0K
  • 13:30 – Unemployment Rate: 5.9%

EUR (Euro):

• Monday, Feb 5:
  • 7:00 – German Trade Balance: 19.0B
  • 8:15 to 9:30 – A series of Services PMI reports across various Eurozone countries.
  • 10:00 – PPI m/m: -0.8%
• Tuesday, Feb 6:
  • 7:00 – German Factory Orders m/m: -0.1%
  • 10:00 – Retail Sales m/m: -0.9%
• Thursday, Feb 8:
  • 9:00 – ECB Economic Bulletin
• Friday, Feb 9:
  • 7:00 – German Final CPI m/m: 0.2%
  • 9:00 – Italian Industrial Production m/m: 0.8%

GBP (British Pound):

• Monday, Feb 5:
  • 9:30 – Final Services PMI: 53.8
  • 17:30 – MPC Member Pill Speaks
• Tuesday, Feb 6:
  • 0:01 – BRC Retail Sales Monitor y/y: 1.2%
• Wednesday, Feb 7:
  • 7:00 – Halifax HPI m/m: 0.8%
  • 8:40 – MPC Member Breeden Speaks

USD (US Dollar):

• Monday, Feb 5:
  • 0:00 – Fed Chair Powell Speaks
  • 14:45 – Final Services PMI: 52.9
  • 15:00 – ISM Services PMI: 52.0
• Tuesday, Feb 6:
  • Tentative – RCM/TIPP Economic Optimism: 47.2
  • 17:00 – FOMC Member Mester Speaks
  • 17:45 – BOC Gov Macklem Speaks
• Wednesday, Feb 7:
  • 15:30 – Crude Oil Inventories: 1.2M
• Thursday, Feb 8:
  • 13:30 – Unemployment Claims: 219K
  • 15:30 – Natural Gas Storage: -197B

Conclusion

This week, the US Dollar flexed its muscles yet again, drawing power from strong job numbers and the Federal Reserve holding firm on interest rates. Across the pond, even as Europe showed signs of economic pep, the Euro couldn’t outshine the steadfast Dollar. The British Pound felt the pressure too, with the Dollar notching gains for the third week straight, despite the UK’s economic data whispering rather than shouting. Up north, the Canadian Dollar struggled under the dual burdens of inflation worries and tumbling oil prices, letting the Dollar lengthen its lead. Down under, the Australian Dollar wilted against the Dollar’s relentless rise, hampered by less-than-stellar economic reports. Meanwhile, the Indian Rupee put up a good fight, managing a slight edge thanks to the country’s upbeat economic outlook. The Singapore Dollar, despite some central bank optimism, couldn’t break the Dollar’s winning streak, marking a fifth week of gains for the USD.

In essence, the Dollar’s dance across the global stage this week was one of undeniable dominance, buoyed by domestic strengths and unmoved by international currents.

So, stay alert and enjoy the financial dance! Happy transferring!