USD/INR – The Indian rupee opened little changed against the dollar after the onshore yuan slipped as Chinese markets reopened after the Lunar New Year holidays. The rupee opened at 71.23 to a dollar at versus its previous close of 71.30. The onshore yuan, catching up with the last week’s strength on the dollar index, was down 0.4% at 6.7640. Meanwhile, investor focus this week will be on the new round of talks between Washington and Beijing. The White House, announcing a timeframe for the talks, said lower-level officials will kick off the meetings on Monday and higher principal-level talks will take place on Thursday and Friday with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
EUR/USD – The euro was marginally lower versus the greenback at $1.1322 in early trade. The strength in the dollar has come despite the Federal Reserve taking a dovish stance at its last policy meeting in January. For now, investors are piling into the safety of the greenback due to fears of a sharp global economic slowdown. The euro came under pressure as core European government debt yields touched their lowest in over two years. The single currency has lost 2.5% so far this month. Benchmark German yields were just 10 basis points away from zero percent. The European Commission sharply cut on Thursday its forecasts for euro zone economic growth for this year and next with the bloc’s largest economies expected to be held back by global trade tensions and domestic challenges.
GBP/USD – Sterling was down 0.1% at $1.2930. Traders expect the pound to remain volatile amid heightened political uncertainty over the Brexit process. The pound has strengthened in 2019 on expectations that a disorderly no-deal Brexit can be averted but worry among investors has returned with less than two months until Britain is due to exit the EU and no obvious path to a deal in sight. The EU on Friday urged British Prime Minister Theresa May to grasp an offer from the Labour opposition to break an impasse over Brexit, but that would reverse May’s determined position. But with no obvious way out of the Brexit deadlock in parliament and May yet to secure any concessions from Brussels, the pound faces further downside risks. May will return to parliament on Feb. 14 for a debate on the Brexit negotiations, when lawmakers could again try to wrest control of the process from her, but a vote on approving the Brexit deal is likely to come later in the month.
USD/JPY – The dollar gained 0.1 percent versus the yen to 109.90. However, traders expect moves in dollar/yen to be small on Monday as Japanese markets remain shut for a public holiday. News that the U.S. and Chinese presidents will not meet before their March tariff deadline has disappointed markets, but price action in risk-sensitive USD/JPY suggests traders expect the countries to extend their truce while negotiations continue. USD/JPY is showing stoicism in the face of de-risking illustrated in falling Treasury yields and stocks. Both China and U.S. could claim a win and fear of increased global economic and financial instability would subside, albeit temporarily. Whether that would be enough to propel USD/JPY above well-established supply near 110 remains to be seen. Two-year Treasury yields back below the 2.5% Fed funds rate doesn’t bode well for the rates-sensitive USD/JPY.
Currency Range for today
Important data releases today
|3:00 PM||GBP||GDP (MoM)||0.0%||0.2%|
|3:00 PM||GBP||GDP (YoY) Q4||1.4%||1.5%|
|3:00 PM||GBP||GDP (QoQ) Q4||0.3%||0.6%|
|3:00 PM||GBP||Manufacturing Production (MoM) (Dec)||0.2%||-0.3%|
|3:00 PM||GBP||Monthly GDP 3M/3M Change||–||0.3%|