The U.S. dollar remained weak on Friday amid the Bank of Japan’s decision to keep stimulus on hold and signs of slowing U.S. economic growth that dimmed prospects for the Fed’s rate hike. The dollar index, which measures the greenback versus a basket of six major currencies, reached an 8-month low of 93.11 and was last down 0.7 percent at 93.14. The greenback fell about 4 percent versus the yen for the week after falling to an 18-month low on Friday, heading for its worst weekly loss since October 2008.
China’s central bank guided its currency fixing higher at the sharpest pace since 2005 on Friday, responding to an overnight tumble in the U.S. dollar. The People’s Bank of China (PBOC) set the reference rate, the midpoint for the yuan trading band against the dollar, at 6.4589, up 6 percent compared with the previous fix at 6.4954. That’s was the biggest change since July 2005, when the currency was unpegged from the dollar.
U.S. inflation remained modest in March as consumer spending barely rose. The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, climbed 0.1 percent last month from an upwardly revised 0.2 percent rise in February and rose 1.6 percent from a year earlier. In March, consumer spending ticked up 0.1 percent after a 0.2 percent gain in February. Meanwhile, personal income advanced a sharp 0.4 percent last month after nudging up 0.1 percent in February.
Euro Area gross domestic product (GDP) expanded by 0.6 percent (q/q) in Q1 2016, following a 0.3 percent growth in Q4 2015, surpassing the pre-crisis level. Economist had forecast a 0.4 percent gain. The growth in the region was buoyed by a surge in new export orders from Germany and a faster rebound in growth in France and Spain. However, euro area annual inflation is estimated at -0.2 percent in April, down from 0 percent in March.
Emerging and Frontier Economies
Europe and Central Asia
The Latvian economy shrank 0.1 percent (q/q) in Q1 2016, following a revised 0.4 percent drop in Q4, according to preliminary estimates. Compared to the same quarter a year earlier, the GDP advanced 1.8 percent.
Latin America and the Caribbean
Unemployment rate in Chile increased to 6.3 percent in Q1 2016 from 5.9 percent in Q4, the highest since three months to October 2015. The number of unemployed persons rose by 28,740 to 539,740, while employed declined by 56,390 to 8.1 million. By sectors, health, construction and transport shed the most of the jobs while the largest increases were recorded in accommodation and food services, financial and insurance activities and mining.
Mexico’s GDP expanded 2.9 percent (y/y) in Q1 2016, higher than a 2.5 percent increase in Q4. It is the highest growth rate since Q4 2012 as production in both industry and agriculture accelerated and services growth remained robust. On a quarterly basis, the economy advanced 0.8 percent, above 0.5 percent in Q4.
Consumer prices in Sri Lanka rose 3.1 percent (y/y) in April, higher than the 2.0 percent increase in March. It was the highest reading since November 2015, mainly driven by increase in food and non-alcoholic beverages, transport, education, and clothing and footwear prices. In contrast, housing and utilities cost fell. On a monthly basis, consumer prices increased 1.3 percent.
Uganda’s consumer prices rose 5.1 percent (y/y) in April, less than expected, after the 6.2 percent increase in March, missing forecasts of 5.9 percent rise. It was the lowest figure since August 2015, due to slower rise in cost of food and energy. On a monthly basis, consumer prices edged up 0.1 percent. Annual core inflation, which excludes food, fuel, electricity and metered water slowed to 6.4 percent from 6.9 percent in March.