Feb 20 2019

Rupee Opens Higher After Dollar Index Extends Losses

USD/INR – The Indian rupee opened higher against the U.S. dollar, in-line with its Asian peers, after the dollar index slid to a near-two-week low. However, crude oil prices and tepid risk appetite at home is expected to keep the rupee’s advance in check. The rupee, resuming trade after a market holiday yesterday, opened at 71.29 against the dollar at opening compared with its previous close of 71.34. The dollar index fell 0.4% yesterday to record its biggest decline this month. The drop in the index came amid a decline in the U.S. 10-year yield below 2.65% and ahead of the minutes of the Federal Reserve’s January meeting, due later today. However, on account of rising risk premium and Brent hovering near $66 per barrel, the rupee is not able to participate much.

EUR/USD – The euro nudged up 0.1% to $1.1348 and stood near two-week peak of $1.1358 brushed on Tuesday. However, the dovish turn by major central banks may force the ECB to keep up, and weigh on EUR/USD in the process. Deteriorating Italian December industrial sales and orders along with plummeting German February ZEW current conditions extended the string of below-forecast euro zone numbers. Bund yields suggest markets suspect the ECB could make an adjustment soon. German 10-year yields are hovering near 10 basis points and just above recent lows. The risks suggest EUR/USD will struggle to gain and its long-term consolidation phase will likely resolve to the downside. Unless U.S. economic growth weakens sharply EUR/USD bears are likely to reign.

GBP/USD – The pound stretched its overnight rally and rose to a two-week high of $1.3065. Sterling had surged more than 1% on Tuesday on hopes that British Prime Minister Theresa May will make progress in seeking changes to her Brexit deal with the European Union. Britain will pursue alternative arrangements to the Irish backstop – the most contentious part of the Brexit withdrawal deal – in its future trading relations with the European Union, Brexit minister Stephen Barclay said on Tuesday. The backstop has become the main point of contention in exit talks, which have reached an impasse with less than six weeks until Britain leaves the bloc.

USD/JPY – The dollar was capped against its peers on Wednesday on falling U.S. yields and before the Federal Reserve’s policy meeting minutes, though it managed to gain on the yen as stronger investor risk appetite curbed demand for the Japanese currency. The U.S. currency was up 0.2% at 110.86 yen. The Japanese currency, which tends to serve as a safe-haven in times of risk aversion, gave up ground as Tokyo shares climbed to fresh two-month highs. The yen is on the defensive with strong equities prompting a ‘risk on’ mood. The dollar had already received a lift against the yen on Tuesday after Bank of Japan Governor Haruhiko Kuroda said the central bank was ready to ramp up stimulus if sharp yen rises hurt the economy.

Currency Range for today

Currency Pair Lower Upper
USD/INR 71.1071.60
EUR/INR 80.5081.30
GBP/INR 92.6593.45
JPY/INR 0.64150.6475

No Important data releases today