USD/INR – The Indian rupee opened higher against the dollar after U.S. equities extended their advance to reach the highest in two months. The rupee opened at 71.70 versus the dollar at opening compared to its previous close of 71.80. Yesterday, U.S. equities rose for the fourth straight session, helped by Friday’s robust jobs data. It was the highest closing for the S&P 500 index since Dec. 3. The gauge is now up 16% from the lows reached in late December amid bets that the Federal Reserve is unlikely to raise rates in coming months. For the rupee, the focus this week will be on whether the Monetary Policy Committee decides to cut interest rates on Thursday or maintain the status quo.
EUR/USD – The euro was flat at $1.1435, off three-week high of $1.1515 set on Thursday. EUR/USD is weakening slightly after euro zone February Sentix index and the December PPI monthly rate missed to the downside, which reminded traders of slowing European zone growth. On one hand, slowing euro zone growth has pushed back expectations for the ECB’s initial hike into 2020, keeping euro upside limited, while on the other hand the Fed’s dovish stance last week and fed funds markets showing no U.S. hikes for 2019 and rates cuts possible in 2020 has helped EUR/USD gain. Thus, the U.S. short-term rate market limits enthusiasm for the greenback. With the ECB and Fed now taking similar cautious stances, EUR/USD is unlikely to see volatile moves.
GBP/USD – Sterling was basically flat at $1.3040 after seesawing during the previous session on uncertainty over the way Britain will leave the European Union. In late Monday trade, sterling gave up gains made earlier in the day after a newspaper report said that goods shipped to Britain from the European Union could be waved through without checks in the event of a “no-deal” Brexit. German Chancellor Angela Merkel on Monday offered a way to break the deadlock over the United Kingdom’s exit from the European Union, calling for a “creative” compromise to allay concerns over the future of Irish border arrangements. UK business minister Greg Clark said on Monday that Britain does not have until the day before its March 29 exit from the European Union to reach a Brexit deal as businesses have to make decisions now.
USD/JPY – Against the Japanese yen, the dollar gained 0.1% to 109.99 yen. It had risen above 110 yen for the first time since Dec. 31 overnight. Just when many had lost faith in USD/JPY upside, the market reversed course, sending USD/JPY higher. The catalyst was stellar U.S. non-farm payrolls data and good manufacturing PMI data Friday. On hindsight, the market may also have been averse to taking USD/JPY any lower. Whatever the case, USD/JPY has rallied strongly, up from 108.49 on Jan 31 to 110.16 overnight, and possibly headed higher still. Holiday-thinned Asia trading today is seeing USD/JPY consolidate just below last night’s high, but the risk is up. Japanese exporters who needed to hedge more receivables for the current fiscal year ending in March look to be sated for now, and seem to be eyeing higher levels for the new fiscal year.
Currency Range for today
Important data releases today
|3:00 PM||GBP||Services PMI (Jan)||51.1||51.2|
|8:30 PM||USD||ISM Non-Manufacturing PMI (Jan)||57.0||58.0|