USD/INR – The Indian rupee opened higher after the dollar weakened against its major peers and Asian currencies. The rupee opened at 71.27 to a dollar versus its previous close of 71.34. In the wake of the “significant underperformance” of the rupee vis-à-vis other Asian currencies this month, the chances of another leg lower on the Indian currency before next week’s interim budget is quite low. In addition to the rally in crude oil prices in January, the rupee’s more than 2% depreciation so far this month has probably factored in the fiscal implications of the upcoming interim budget.
EUR/USD – All eyes will be on the euro as investors await the European Central Bank’s monetary policy announcement later on Thursday where it is all but certain to keep policy unchanged. The single currency was marginally higher at $1.1383. The euro has lost around 1.6 percent of its value over the last two weeks as traders expect the ECB to remain dovish and keep monetary policy accommodative for an extended period of time. Low inflation as well as weaker-than-expected economic activity in Germany and France, however, may lead ECB President Mario Draghi to point towards a potentially longer lasting slowdown. If the central bank lowers its growth or inflation forecasts and Draghi focuses on weaker growth, we could see EUR/USD fall to $1.12 easily. EUR/USD was last trading at 1.1388.
GBP/USD – An attempt by British lawmakers to prevent a no-deal Brexit was gaining momentum on Wednesday after the opposition Labour Party said it was likely to throw its parliamentary weight behind that. The United Kingdom, facing the deepest political crisis since World War Two, is due to leave the European Union on March 29 but has no approved deal on how the divorce will take place. Sterling jumped to a 10-week high against the dollar, rising to $1.3079, on bets that a no-deal Brexit can be avoided if parliament exerts greater control over the process. Expectations of a delay drove GBP/USD to an 11-week high today as spec traders still appear to be unwinding the large GBP shorts versus the dollar, which stood near $5 bln just before the U.S. government shutdown halted the CFTC reports in December. It’s now pushing up against 200-DMA resistance. Though PM May remains opposed to delaying Brexit she hasn’t yet delivered an alternative that can get through parliament. Labour’s amendment which creates a Feb 26 deadline for parliamentary approval of a Brexit deal before asking for an Article 50 delay, has support from a growing number of May’s conservative colleagues. GBPUSD was last trading at 1.3077.
USD/JPY – Today’s unexpectedly weak Japanese trade data highlights the danger in seeking safety from China-related economic risks in the yen, which has retreated broadly. Collateral damage from the U.S-China trade war came into focus with December’s 3.8 percent y/y drop in Japanese exports due to a 7 percent tumble in exports to China, its biggest trading partner And, the BOJ is in no position to ease policy due to risks to the domestic financial sector, already dealing with negative rates and a nearly flat yield curve.Broader safe-haven flows into the yen have receded today amid a mild rebound in risk markets and flows into higher yielding currencies, though that could easily be reversed if the January 30-31 U.S.-China trade talks fail. Currently, USD/JPY is capped at 110 on EBS, the Dec 25 low and close to the pivotal 30-DMA at 110.05. Part of today’s rebound in stocks is a correction of yesterday’s selloff and the bounce in Treasury yields is partly a concession before next week’s supply. USDJPY last trading at 109.50.
Currency range for today
Important data releases on 24-01-2019
|24-Jan||2.00 PM||EUR||German Manufacturing PMI (Jan)||51.3||51.5|
|24-Jan||6.15 PM||EUR||Deposit Facility Rate||-0.40%||-0.40%|
|24-Jan||6.15 PM||EUR||ECB Marginal Lending Facility||0.25%||0.25%|
|24-Jan||6.15 PM||EUR||ECB Interest Rate Decision (Jan)||0.00%||0.00%|
|24-Jan||9.30 PM||USD||Crude Oil Inventories||-0.042M||-2.683M|