Wednesday’s trade saw USD/PKR within the range 154.00-154.60. The pair closed 0.16% lower at 154.05, after the Federal Reserve left the target range for the federal funds rate intact at 1.50%-1.75%, in line with expectations, citing continued moderate growth in economic activity and a strong labor market.
The bank offered no new guidance regarding its $60 billion in monthly purchases of US Treasury bills, aimed to provide short-term liquidity in bank funding markets.
The Fed also abstained from specifically addressing economic risks, stemming from the coronavirus outbreak in China.
USD and other safe haven assets seemed to have remained in favor, as headlines of the situation with the newly identified coronavirus continued to affect sentiment. The latest reports stated the outbreak had already caused the deaths of more than 130 people, while total cases of infection had risen to almost 6 000.
Investor concerns over impact on economic growth persisted. Zhang Ming, an economist at the Chinese Academy of Social Sciences, projects a 1% slowdown in Chinese economic growth during the first quarter, as the outbreak affects more sectors and may prompt the government to introduce stimulus measures.
Meanwhile, after leaving its benchmark interest rate unchanged at 13.25% on Tuesday, State Bank of Pakistan noted current policy stance was appropriate to push inflation down to the medium-term target range of 5% to 7% over a period of 6 to 8 quarters. The central bank also said it expected average inflation rate to remain at 11%-12% in 2020, as it introduced no change compared to its prior forecast.
The US Dollar Index was 0.03% weaker to 98.03 in late Asian trade on Thursday, while being close to yesterday’s near two-month high of 98.19.
In terms of economic calendar, today market players will be paying attention to the preliminary US GDP data for Q4. It may show that economy expanded at an annualized rate of 2.1% during the fourth quarter, according to market consensus. In Q3, US GDP rose 2.1%, according to final data. In case preliminary GDP estimate exceeds expectations, this would have a strong bullish effect on the USD.
Also at 13:30 GMT the US Labor Department will report on jobless claims. The number of people in the country, who filed for unemployment assistance for the first time during the business week ended January 24th, probably rose to 215 000, according to expectations, from 211 000 in the preceding week.
USD/PKR was up 0.31% to 154.53 in late Asian session on Thursday.
