The Dollar rallied last week against the most of the major currencies. The Dollar gained about 200 pips against the Euro, and saw a 300 pips rise against the Yen. The Dollar slightly tumbled against the Pound.
The Dollar soared following a series of positive data from the U.S. economy. The Producer Price Index climbed by 0.7% in March, beating expectations for 0.4% rise. This shows that inflation is steadily rising in the U.S. which means that an Interest Rates hike might take place soon. In addition, the Existing U.S. Home Sales rose by 6.8% in March to a 5.35 million annual rate, from a 5.01 million pace in February. Considering that the housing sector in the U.S. was the main reason for the recent recession, every positive data regarding the building industry tends to boost the Dollar. The positive data from the U.S. economy continued as the Core Durable Goods Orders rose by 2.8% on March. This report is a leading indicator of production, and the positive result shows that the economy is advancing faster than expected.
As for the week ahead, many interesting economic publications are expected from the U.S. Yet the publication which holds the greatest impact on the market will surely be the Federal Funds Rate. The Federal Funds Rate is in fact the U.S. Interest Rates for May. Current expectations are that the Fed will leave rates at lower than 0.25%, however, considering the recent positive economic data, an interest rates hike won't be a complete surprise. This means that every decision is likely to have a large impact on the market, and traders are advised to follow this publication.