India Rupee Snaps 3-Day Fall On Fed Easing Bets

India Rupee Snaps 3-Day Fall On Fed Easing Bets

18 Jun 2019 05:37 PM
 

Financial Market Overview

18th June, 2019

Evening Coffee

MARKETS AT CLOSE                                    

Indian Rupee

  • The Indian rupee gained for the first time in four sessions against the dollar, as bets over the U.S. Federal Reserve adopting an easing bias at its upcoming policy meeting increased, and as lower oil prices continued to support the local unit. The rupee settled at 69.70 to the dollar, against 69.90 at the previous close. The currency opened at 69.83 and rose to the day’s high of 69.63 as private banks stepped up greenback sales in late trade.
  • Now all eyes are on tomorrow’s Fed’s decision and we expect FOMC will use this policy to lay groundwork for easing in its next policy. Speculation of dovish FOMC has drove the US 10-year yield down, giving aid to emerging market currencies.
  • The odds of a Fed rate cut at its upcoming meet now stand at 24%, with an around 85% probability of a rate cut at the next meeting in July, according to CME Fedwatch tool.
  • The Fed’s two-day policy review begins later today and a decision is due tomorrow, after Asian markets close.

Indian Equities

  • Benchmark indices ended volatile session marginally higher and snapped four-day losing streak, driven by select banks and IT stocks. The BSE Sensex rose 85.55 points to 39,046.34 and the Nifty50 gained 19.30 points at 11,691.50.
  • The market breadth was in favour bears as about 1,546 shares declined against 964 advancing shares on the BSE. ICICI Bank, Infosys, HCL Technologies, TCS, Vedanta, Coal India, Power Grid, Ultratech Cement and BPCL were gainers among Nifty50 stocks. Indiabulls Housing Finance fell 7 percent. Maruti Suzuki, Hindalco, Sun Pharma, Axis Bank and HDFC were down 1-2 percent. Jet Airways plunged over 40 percent after landing in bankruptcy court.

Global Markets

  • European markets are broadly higher today with shares in France leading the region. The CAC 40 is up 1.26% while Germany's DAX is up 0.84% and London's FTSE 100 is up 0.59%.
  • Wall Street edged higher on Monday, supported by Facebook, Amazon and Apple, as investors awaited a key Federal Reserve meeting that is expected to lay the groundwork for an interest rate cut later this year. The U.S. central bank is expected to leave borrowing costs unchanged at its two-day policy meeting starting Tuesday, but its statement will provide insight into the impact of the U.S.-China trade war, President Donald Trump's calls for a rate cut and weaker economic data. The Dow Jones Industrial Average ended 0.09% higher at 26,112.53 points, while the S&P 500 also gained 0.09% to close at 2,889.67.The Nasdaq Composite added 0.62% to 7,845.02.
  • Inflation in the euro zone slowed to 1.2% in May, the lowest rate in more than a year, as price growth in the energy and services sectors slackened. The final data is bad news for the European Central Bank (ECB), which targets a rate below but close to 2% and has promised further action if inflation does not pick up. Eurostat said prices in the 19-country currency bloc went up by 1.2% on the year, slowing from 1.7% in April. It was the lowest growth rate since April 2018 when inflation was also recorded at 1.2%.
  • New home prices in China rose at their fastest pace in five months in May, complicating government efforts to keep frothy housing markets under control as it rolls out more stimulus for the slowing economy. Average new home prices in China's 70 major cities rose 0.7% in May from the previous month, picking up from a 0.6% rise in April and the quickest pace since December.

 


 

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