Mar 12 2019

Rupee Opens Higher As Dollar Index Extends Losses; Oil Prices Eyed

USD/INR – The Indian rupee opened higher against the U.S. dollar, buoyed by an upbeat risk mood and a further decline in the dollar index. The rupee opened at 69.75 against the dollar, compared with its previous close of 69.88. In data released yesterday, U.S. retail sales unexpectedly rose in January, while numbers for December were revised lower. Retail sales in the world’s largest economy rose by 0.2% month-on-month in January, compared to an unchanged reading expected. The better-than-expected US January retail sales numbers allayed fears of an economic downturn, which had plagued equities all of last week.

EUR/USD – EUR/USD has been unable to mount a substantial rally despite the dollar’s struggles after mixed U.S. retail sales, with a host of potential obstacles suggesting the euro will remain troubled. Another round of below-forecast German data reminded traders that euro zone core growth is fragile at best. German January industrial output came in at -0.8% versus forecasts of +0.5%. As a result Germany’s 10-year Bond yield briefly dipped below 0.06%, allowing German-U.S. spreads to widen. The downbeat data reinforces the ECB’s dovish stance and suggests monetary policy will remain accommodative. Meanwhile, views on the U.S. economy provide little fuel for EUR/USD gains. The euro found support against the dollar on the Brexit news and the improvement in risk appetite. The single currency was last up about 0.15% at $1.1259.

GBP/USD– Sterling rose sharply as speculation swirled that British Prime Minister Theresa May might be closer to securing approval for her Brexit deal. The pound extended earlier gains as May won legally binding Brexit assurances from the European Union, in a last ditch attempt to sway rebellious British lawmakers who have threatened to vote down her divorce deal in a parliamentary vote on Tuesday. Sterling, jumped as high as $1.3290 as some investors bolstered bet the prime minister could secure a divorce deal before Britain’s scheduled March 29 departure from the EU. The pound was last trading 0.6% higher on the day at $1.3223, having been as low as $1.2945 at one stage on Monday.

USD/JPY – Against the Japanese yen, a safe-haven currency often bought in times of rising volatility, the dollar was 0.2% higher at 111.43 yen. The U.S. retail sales data did little to settle debate over the length of the U.S. growth slowdown and Fed patience, leaving USD/JPY to struggle in a lower range near-term. The retail sales may trim Q4 GDP growth estimates and lift Q1, but the Fed and markets will remain cautious since recent data remains skewed by the government shutdown and the since-withdrawn threat of higher U.S. tariffs on Chinese goods and, in Asia, China’s February Lunar New Year holiday. The BOJ will leave policy unchanged Friday, but may, like other central banks, recognize growth risks, even if there’s little scope for more easing.

Currency Range for today

Currency Pair Lower Upper
USD/INR 69.50 70.00
EUR/INR 78.20 79.00
GBP/INR 91.55 92.35
JPY/INR 0.6230 0.6290

Important data releases today

Time Ccy Event Forecast Previous
3:00 PM GBP GDP (MoM) -0.4%
3:00 PM GBP Manufacturing Production (MoM) (Jan) 0.2% -0.7%
3:00 PM GBP Monthly GDP 3M/3M 0.2% 0.4%
6:00 PM USD Core CPI (MoM) (Feb) 0.2% 0.2%