Rupee Opens Flat Ahead of US Data, Fed Speeches

Rupee Opens Flat Ahead of US Data, Fed Speeches

16 Jul 2019 09:08 AM

USD/INR – The Indian rupee opened little changed against the dollar as investors await U.S. retail sales data and speeches by Federal Reserve officials. The rupee opened at 68.56 to the dollar at opening compared with its previous close of 68.5350. The data released after markets closed yesterday showed that India’s trade gap narrowed to $15.3 billion last month from $16.6 billion a year ago. Exports declined by 9.71% and imports fell 9.06%. The trade deficit was a tad higher than the $15 billion median estimate. Most Asian currencies were little changed on Tuesday ahead of the June U.S. retail sales and industrial output data. In addition to the U.S. economic data, traders will be eyeing speeches by a number of Fed officials, including Powell, later in the day. 

EUR/USD – The euro was little changed at $1.1261 after shedding 0.1% the previous day, constrained by expectations for a dovish European Central Bank meeting next week. For the time being, EUR/USD is likely to be corralled in a broad 1.1100-1.1400 range as market players consider a Fed-ECB policy standoff.  Working in the Euro’s favor is that expectations are for the Fed to be more aggressive than the ECB. This should limit greenback appreciation and underpin EUR/USD upside risks. Against this, however, investors are also speculating that the ECB might introduce a new round of QE later this year which could counter expected Fed aggressiveness. Thus, these countervailing forces could keep EUR/USD balanced within its recent range.

GBP/USD – The pound struggled near a six-month low against the dollar on Tuesday hampered by persistent worries over Brexit.  The pound stood steady at $1.2519 following an overnight loss of 0.5%. Sterling was under pressure as investors were nervous about the prospect of eurosceptic Boris Johnson winning the Conservative party leadership contest and becoming the next British prime minister as early as the end of this month. Poor economic data and signals from the Bank of England that it could cut interest rates instead of raising them as previously expected have also hit the pound.

USD/JPY – The dollar fought for traction against the yen as the prospect of a Federal Reserve interest rate cut later in the month continued to keep the greenback on the defensive. USD/JPY is liable to maintain a tight range straddling this week's largest options expiries at or near 108, at least until Tuesday's U.S. retail sales report. Though markets price a 25bps rate cut by the Fed at month's end as fait accompli, yesterdasy's better-than-expected Chinese data should at least temper expectations for a 50bps cut. But steadier short-term rates come against a pullback in longer-term rates that had rebounded after the NFP beat and fear the Fed's easing bias made duration a poor trade. Trade war news is the ever-present risk-on/off input. USD/JPY was last trading at 107.93.

Currency Range for today

Currency Pair Lower Upper
USD/INR 68.40 68.80
EUR/INR 76.80 77.60
GBP/INR 85.50 86.30
JPY/INR 0.6325 0.6385

Important data releases today

Time Ccy Event Forecast Previous
2:00 PM GBP Average Earnings Index + Bonus (May) 3.1% 3.1%
2:00 PM GBP Claimant Count Change (Jun) 18.9K 23.2K
2:30 PM EUR German ZEW Economic Sentiment (Jul) -22.1 -21.1
6:00 PM USD Core Retail Sales (MoM) (Jun) 0.1% 0.5%
6:00 PM USD Retail Sales (MoM) (Jun) 0.1% 0.5%