USD/INR – The Indian rupee opened changed against the dollar, with investors awaiting further developments on the nation’s conflict with Pakistan. The rupee opened at 71.26 against the dollar at opening compared with its previous close of 71.22. For the present moment, the moves on the rupee will primarily be a function of news flow surrounding India and Pakistan. India’s central bank has made it quite clear over the last two sessions that it is ready to step in to contain volatility and not allow the rupee to fall significantly. This will help ward off any speculative dollar buying and provide a measure of support to the rupee. In economic data released on Wednesday, U.S. factory orders rose by 0.1% in December, less than the 0.5% on-month increase expected. Pending home sales rose by 4.6% in January compared with the previous month, higher than estimates.
EUR/USD – EUR/USD turned tail after barely eking out a three-week high, with the rally showing signs of a pause to take stock of euro zone economic risks. The downside surprise to Italy’s February consumer confidence reminded the market that Italian growth prospects are dismal, helping to weigh down EUR/USD. U.S. Treasury yields, especially the 10-year, are rallying from range lows, pushing out German-U.S. spreads and adding additional weight to EUR/USD. Short-term interest rate markets suggest the Fed and ECB will take diverging paths on rates. The euro was slightly higher at $1.1380.
GBP/USD– Sterling held onto gains after rallying to its highest levels in seven months on Wednesday as traders ramped up bets that a no-deal Brexit was less likely and that Britain’s departure from the European Union would be delayed. In signs of progress towards a compromise, it was reported that May will offer workers’ rights pledges to gain Labour’s support and the head of the Conservative eurosceptics has softened his Irish backstop stance. Though the first signs of parliamentary compromise have emerged, there is little concrete progress on the Irish backstop stumbling block, as the EU looks on bemused. Positive month-end flows may have contributed to recent GBP strength. The pound was flat at $1.3300 after climbing as high as $1.3351 in the previous session.
USD/JPY – The Japanese yen, seen by investors as a safe haven in times of market stress and geopolitical tensions, was up one tenth of a percent on the day at 110.86 yen per dollar. USD/JPY’s multi-year consolidation has become so protracted that a major breakout is statistically an ever-rising risk this year, technical analysis suggests, and shifting Fed policy or Brexit confusion might be possible triggers if the market keeps coiling in that direction. Stocks have already roared back toward all time highs, the U.S. and China have stepped away from trade war escalation and hard Brexit is seen unlikely. If all that risk-on news doesn’t get USD/JPY above range tops near 115 dating back to early 2017, January’s flash-crash to 104.10 will look like a preview of an overdue breakdown.
Currency Range for today
Important data releases today
|3:30 PM||INR||Federal Fiscal Deficit (Jan)||–||7014.57B|
|5:30 PM||INR||GDP Annual||–||6.7%|
|5:30 PM||INR||GDP Quarterly (YoY) (Q3)||6.9%||7.1%|
|5:30 PM||INR||Infrastructure Output (YoY) (Jan)||–||2.6%|
|7:00 PM||USD||GDP (QoQ) (Q4)||2.6%||3.4%|