USD/INR – The Indian rupee opened higher against the dollar in the wake of a broad advance in regional currencies. The Brent crude’s decline amid a selloff on Wall Street is further expected to boost the rupee. The rupee opened at 71.17 versus its previous close of 71.44. The area around 71.50 remains the “high water mark” that the dollar bulls need to clear to add to the upside momentum on the pair that began earlier this month. Fiscal concerns amid expectations of a populist budget ahead of India’s federal elections will keep dollar bulls “interested on any significant dips” on the pair.
EUR/USD – EUR/USD are compounding ahead of Thursday’s ECB meeting and trend line support off of November’s low could break soon. A huge downside surprise to January’s German ZEW current conditions report reinforces sentiment of slower euro zone growth. The trend of weak data has the market expecting the ECB to take a dovish stance Thursday. Speculation on new TLTRO discussions and a change in ECB forward guidance is in heavy circulation. The global growth outlook weighs upon EUR/USD as well after the IMF lowered GDP forecasts and President Xi Jinping said China should be alert to black swan or grey rhino risks. The growth concerns are hitting risk sensitive assets, leading to yen gains across the board. EUR/JPY has slid near 124.00 and EUR/USD is going along for the ride. EUR/USD is threatening trend line support near 1.1331. Should risk sour further that support is likely to crumble. EUR/USD was last trading at 1.1367.
GBP/USD – GBP/USD has been better bid since the meaningful vote on speculation that Brexit will all come good in the end, or not at all. The day’s until the lawmaker’s decision on a proposal to push back Article 50, led by Tory MP Boles and Labour’s Cooper, are going to be touch and go. Chips are down for a soft Brexit, an extension of Article 50, a second referendum and BoE hiking rates on a positive Brexit outcome for the UK economy. The bears have started to come to terms with the fact that the market is of the mind that Parliament will not allow a hard Brexit to take place. It is apparent that MPs will force PM May to extend Article 50 until the impasse can be resolved and a soft Brexit deal that can be approved in The Commons and finally applied. British Prime Minister Theresa May has sought to break the parliamentary deadlock over Brexit by proposing to seek further concessions from the European Union on a plan to prevent customs checks on the Irish border. GBP/USD was last trading at 1.2963.
USD/JPY – USD/JPY’s 5.5 percent recovery from the Jan 3 flash crash has brought prices back to technical and fundamental equilibrium points that will likely linger awaiting substantive U.S-China trade news or the end of the U.S. economic data drought caused by the government shutdown. Friday’s 109.89 high showed selling from Japanese exporters, real money and others increased enough ahead of 110 to stymie the rebound. Dreary Chinese GDP Monday and debunking of last week’s rumors regarding progress on the U.S.-China trade front have weighed on stocks and Treasury yields, while favoring the haven yen. High-level trade talks are to resume next week, but it’s unclear that progress is being made on key intellectual property and other structural issues. Perhaps complicating talks, and favoring a risk-off and USD/JPY bearish response, is the pending extradition of a Huawei executive from Canada to the U.S. before the Jan 30 extradition deadline. More broadly, the Fed, and USD bulls, have become far more data-dependent amid a U.S. data drought that will only abate when the government shutdown ends. This suggests trade news and financial market risk tolerances will dominate until then. Support is at 109.00-08 and 108.58-60 into Wednesday’s status quo BOJ meeting. USD/JPY last trading was 109.73.
Currency range for today
No Important data releases on 23-01-2019