Rupee Opens Flat As Oil Plunges, Dollar Gains

Rupee Opens Flat As Oil Plunges, Dollar Gains

13 Jun 2019 09:11 AM

USD/INR – The Indian rupee opened flat against the U.S. currency as the dollar index’s biggest gain in two weeks would likely offset the Brent crude’s fall to its lowest in more than four months. The rupee opened at 69.34 to a dollar compared with its previous close of 69.34. The dollar index’s advance came despite a softer-than-expected U.S. consumer inflation data, which further encouraged bets that the Federal Reserve may cut rates. Retail inflation in the world’s largest economy rose 1.8% year-on-year in May, lower than the 1.9% expected. The more closely watched core consumer price index was up 2%, a 10th slower than expected. Meanwhile, Brent crude yesterday closed at its lowest since late-January following an unexpected increase in U.S. crude stockpiles. The uncertain demand outlook amid mounting trade tensions has prompted an 18% drop in Brent crude since the beginning of May.

EUR/USD – The euro was a shade higher at $1.1293 after retreating 0.35% overnight. The euro took a hit after U.S. President Donald Trump said on Wednesday he was considering sanctions over Russia's Nord Stream 2 natural gas pipeline project and warned Germany against being dependent on Russia for energy. EUR/USD bulls are a bit frustrated after the downside surprise to U.S. May core CPI failed to lift the pair to new highs. Bulls need a downside surprise to Friday's U.S. May retail sales, which would increase the chances of a Fed cut next week.

GBP/USD – Sterling slipped as British lawmakers on Wednesday defeated an attempt led by the opposition Labour Party to try to block a no-deal Brexit. The pound stood little changed at $1.2692 following a loss of 0.3% on Wednesday. Investors are concerned the next prime minister could put Britain on course for a no-deal divorce with the European Union and send the pound plummeting.  Frontrunner Boris Johnson, a eurosceptic, has said he would be willing to take the nation out at the end of October, even if it meant leaving without a deal. But Labour on Wednesday debated a motion to seize parliamentary time on June 25 to give lawmakers the chance to introduce legislation preventing a no-deal Brexit.

USD/JPY – The dollar was a shade lower at 108.35, confined to a tight range after ending the previous day unchanged. Slightly-below-forecast U.S. May CPI hasn't heightened Fed rate cut expectations -- which had already priced in at least two cuts this year - enough to get USD/JPY below the overnight lows because the market awaits weightier retail sales data Friday and the June 19 FOMC meeting. Following dour June U.S. employment data, traders and the Fed will be watching for any signs of weaker consumption. But the main weight on USD/JPY is rising U.S. and Chinese protectionism and the potential for escalation if the June 28-29 G-20 meeting doesn't produce at least a truce. China is ramping up stimulus to cushion the trade war blow, having seen only modest credit expansion in May.

Currency Range for today

Currency Pair Lower Upper
USD/INR 69.10 69.60
EUR/INR 78.00 78.80
GBP/INR 87.70 88.50
JPY/INR 0.6360 0.6420

Important data releases today

Time Ccy Event Forecast Previous
5:30 PM INR Current Account (USD) - -16.90B


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