Greenback closed a week of rises as the USD became a preferable asset currency amid growth concerns in the euro are and the Argentinian default at the same time when reports show the US growth is accelerating from the rather disastrous first quarter. This is bolstering the case for rate hikes by the federal reserve and, in turn, is boosting bullish bets on the dollar. The US currency hit an eight-month high against the euro and the emerging market currencies lost ground as the news of Argentinian default broke. Other reasons for relative strength come from the additional US and EU sanctions against Russia while the ECB will most likely keep rates low next week.
There are no signs that the Fed will refrain from raising rates in 2015 and the strong data has been driving the appreciation. Bloomberg dollar spot index added 0.7 percent during the week, the biggest weekly advance since the first week of the year. It reached 1,023.42 which is the highest level since the second half of March.
European currency remained at $1,3427 after loosing to $1.3367. The yen was at 102.61 against the USD, depreciating 0.8 percent for the third consecutive week of losses. Yen also depreciated against the EUR falling 0.7 percent to 137.78 per EUR. British currency, the pound, declined to $1,6821 against the USD, a 0.9 percent weekly decline. HSBC sees the USD strengthening against the pound at $1,6800.
USD also strengthened against the basket of emerging market currencies, with the greenback advancing against 21 of 24 developing market currencies tracked by Bloomberg. Indonesian rupiah fared the worst, losing 1.9 percent and ruble dropped 1.8 percent. Yuan added 0.2 percent on the weekly basis.
Argentinian peso is probably the worst performing currency in the world right now as the country faces stagflation and prices rise in double digit figures, the news of a selective default that S&P announced are not making it easier. The peso plunged for the 14th week in a row as the nation lead by president Kirchner decided not to pay $536 million at the end of a month long wrangling in court over the payment of bonds from the last default.
Kirchner denies the default smearing the funds in country’s media as vulture capitalists. Problems have arisen in certain clauses that require payouts of all bonds in this case and not just in cases of the vulture fund claims. Peso lost 0.7 percent this week, the longest losing streak was 100 weeks up until the Jan 31 week.