21.04.202514:23:00UTC+00Dollar Falls Further As Markets Fret About Growth, Fed's Freedom

It was a weak performance by the U.S. Dollar during the week ended April 18, amidst renewed concerns about economic growth in the U.S. President Donald Trump's renewed call to cut interest rates and his plans to overhaul the Federal Reserve also contributed to the Dollar's decline. Hawkish comments from Fed chair Jerome Powell failed to support the greenback.

The U.S. Dollar inter alia slipped against the euro, the British pound, the Australian dollar, as well as the Japanese yen. The Dollar Index which measures the Dollar's strength against a basket of 6 currencies also extended losses amidst concerns about the Fed's independence.

From the level of 100.10 on April 11, the Dollar Index plunged 0.72 percent in a week's time. The Index which had touched a weekly high of 100.28 on Tuesday dropped to the weekly low of 99.17 by Wednesday. The Index eventually recovered and closed the week at 99.38.

Data released on Wednesday showed retail sales in the U.S. jumping 1.4 percent month-on-month in March, versus a 0.2 percent gain in February and exceeding forecasts of 1.3 percent.

Meanwhile, Federal Reserve Chair Jerome Powell's hawkish comments on Wednesday drained markets' hope of an early rate cut by the Fed. Powell warned of risks that the new tariff policies could push inflation and employment further from the central bank's goals. He also said the Fed would wait for more data on the economy's direction before changing interest rates. He was also not inclined to see the recent market volatility as a sign of stress that warranted a Fed response.

Amidst the dollar's weakness and the widely expected rate cut by the European Central Bank, the EUR/USD pair rallied 0.27 percent during the week ended April 18. From the weekly high of 1.1425 touched on Monday, the pair dropped to 1.1264 on Tuesday. The pair eventually closed at 1.1391, versus 1.1360 a week earlier. The ECB on Thursday cut interest rates for a seventh time in a year and left the door open to more easing.

The pound surged more emphatically against the greenback during the week ended April 18 despite a larger-than-expected decline in annual inflation. The GBP/USD pair which had closed at 1.3080 on April 11 gained 1.64 percent during the week ended April 18 to close at 1.3294. The weekly trading range was wider, between a low of 1.3062 recorded on Monday and a high of 1.3301 recorded on Friday.

In the week that saw the release of the minutes of Reserve Bank of Australia's monetary policy meeting, the Australian Dollar jumped 1.45 percent against the U.S. Dollar. The minutes revealed a cautious approach to future interest rate moves. From the level of 0.6285 recorded on April 11, the pair rose to close at 0.6376. During the week ended April 18, the pair oscillated between a low of 0.6275 recorded Monday and the high of 0.6395 recorded on Thursday and Friday.

The U.S. Dollar weakened against the Japanese Yen during the week ended April 18. The USD/JPY pair closed the week at 142.17 versus 143.51 a week earlier, registering a decline of 0.93 percent. The pair ranged between the high of 144.32 recorded on Monday and the low of 141.61 recorded on Thursday. The currency movements come amidst trade tariff jitters as well as expectations about Bank of Japan lowering economic growth projections at its upcoming policy meeting.

Amidst fears about the Trump administration's plans to overhaul the Fed, the 6-currency Dollar Index slipped to 97.92. It is currently at 98.27. The persistent dollar weakness has helped the EUR/USD pair to rise to 1.1512 and the GBP/USD pair to increase to 1.3400. The AUD/USD pair has also rallied to 0.6424. The USD/JPY pair has declined to 140.70.