Rupee Opened Stronger Amid Broad Market Optimism Backed By U.S. Elections

Rupee Opened Stronger Amid Broad Market Optimism Backed By U.S. Elections

06 Nov 2020 10:05 AM
 

USD/INR

The Indian rupee opened stronger at 73.99 compared to 74.39 in the previous session tracking not only the trading optimism but Fed Chair Jerome Powell’s cautious words marking the tail risk weighing on the US Dollar. The U.S. presidential elections are yet to be declared, but Democratic Party candidate Joe Biden remained a firm favorite to win. With the Democratic Party unable to retain control of the Senate, hopes for a bigger fiscal stimulus are wavering. The U.S. central bank yesterday left interest rates at near zero percent and made no changes to the asset purchases, in line with expectations. Fed Chair Jerome Powell reiterated the need for more economic stimulus. Dollar index advanced 0.2% at 92.70 after falling 0.9% yesterday, the biggest single-session fall in four months. U.S. Treasury yields drifted lower again as investors bet that a divided U.S. government will cap debt-funded government spending and limit bond supply, the ten-year US yield at 0.77%. Brent crude was down 1.73% at $40.22 a barrel.

EUR/USD

It’s a relatively busy day ahead on the economic calendar. Key stats include German industrial production figures for September and 3rd quarter nonfarm payrolls from France. Away from the economic calendar, Brexit, COVID-19, and U.S politics will remain key drivers. The euro has been undermined by the spread of the coronavirus considering most of Europe is hurt much more than recorded during the first wave. At the time of writing, the Euro was up 0.14% to $1.1737.

GBP/USD

It’s a quiet day ahead on the economic calendar. October house price figures are due out later today but will have a muted impact on the Pound. GBP rose to fresh highs since October 21 as the US dollar was heavily sold amid broad market optimism, mainly backed by the US election update. Updates on Brexit and U.S politics will be the key drivers, as England goes back into lockdown. The pair also benefits from the Bank of England’s (BOE) no negative rates and cautious comments from the Federal Reserve Chairman Jerome Powell. The BOE refrained from any interest rate change, as expected, while announcing an additional GBP150 billion of Quantitative Easing (QE). At the time of writing, the Pound was down 0.18% to 1.2962.

USD/JPY

Yen hit a new multi-day bottom on Thursday, while also declining the most since late-August, mainly due to the sell-off in the US dollar across its main peer. Household spending figures were in focus in the early session. According to the Statistic Bureau, household spending increased by 3.8% in September.  At the time of writing, Yen was down 0.19% to $104.28.

Important data releases today

Time

CCY

Event

Forecast

Previous

08:30

USD

Nonfarm Payrolls (Oct)

600K

661K

08:30

USD

Unemployment Rate (Oct)

7.7%

7.9%