India Rupee Snaps 2-Day Fall On Dollar Retreat; Fed Minutes Eyed

India Rupee Snaps 2-Day Fall On Dollar Retreat; Fed Minutes Eyed

21 Aug 2019 05:33 PM
 

Financial Market Overview

21st Aug, 2019

Evening Coffee

MARKETS AT CLOSE                                    

Indian Rupee

  • The Indian rupee fell for the first time in three sessions against the U.S. currency on the back of a retreat in the dollar index from three-week highs ahead of the release of the Federal Reserve’s July policy minutes.
  • The rupee settled at 71.56 to a dollar, against 71.70 at previous close. The local unit, which had touched its lowest in over six months yesterday, opened at 71.45 and declined to the day’s low of 71.61 on dollar purchases by state-run lenders, likely on behalf of oil importers.
  • The movement in the pair (USD/INR) for the day was muted as traders have refrained from placing any larger bets ahead of the FOMC and MPC minutes, Broadly the market is expecting both FOMC and MPC minutes to be dovish but an outcome different from the expectations can change dynamics for the local unit.

Indian Equities

  • The Indian rupee fell for the first time in three sessions against the U.S. currency on the back of a retreat in the dollar index from three-week highs ahead of the release of the Federal Reserve’s July policy minutes. The rupee settled at 71.56 to a dollar, against 71.70 at previous close.
  • The local unit, which had touched its lowest in over six months yesterday, opened at 71.45 and declined to the day’s low of 71.61 on dollar purchases by state-run lenders, likely on behalf of oil importers. The movement in the pair (USD/INR) for the day was muted as traders have refrained from placing any larger bets ahead of the FOMC and MPC minutes, Broadly the market is expecting both FOMC and MPC minutes to be dovish but an outcome different from the expectations can change dynamics for the local unit.

Global Markets

  • European markets are sharply higher today with shares in France leading the region. The CAC 40 is up 1.41% while London's FTSE 100 is up 1.09% and Germany's DAX is up 1.06%.
  • Financial shares led U.S. stocks lower on Tuesday to end a three-day rally as investors awaited comments from Federal Reserve Chair Jerome Powell at the end of the week. The S&P 500 financial index dropped 1.4% and the group weighed most heavily on the benchmark index among its major sectors, which all registered losses. The Dow Jones Industrial Average fell 173.35 points, or 0.66%, to 25,962.44, the S&P 500 lost 23.14 points, or 0.79%, to 2,900.51 and the Nasdaq Composite dropped 54.25 points, or 0.68%, to 7,948.56.
  • The downturn in British manufacturing eased off a little in August, although the slowdown in the global economy and the Brexit crisis mean a recovery still looks a way off. The Confederation of British Industry's (CBI) monthly order book balance rose to -13 from -34 in July. Domestic and export orders were below normal and the CBI's gauge of expected selling prices fell to its lowest level since February 2016. Official data earlier this month showed manufacturing output, which accounts for 10% of the economy, dropped in the second quarter at the fastest pace in a decade, contributing to fears of a recession in Britain.
  • Britain's drifting property market would probably take a hit from a disorderly Brexit, with average prices slipping about 3% nationally in the ensuing six months and as much as 10% in London, Roughly 85% of respondents said both UK and London house prices would fall in the six months subsequent to leaving the European Union without an agreement. But if Britain departs the EU with a transition deal - the scheduled leave date is Oct. 31 - house prices are due a mild 1.5% lift over the following two quarters. They would rise 1.4% in the capital.

 

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