Rupee Opens Flat On Tepid Asia Cues

Rupee Opens Flat On Tepid Asia Cues

21 May 2019 09:11 AM
 
USD/INR – The Indian rupee opened little changed against the dollar amid mixed regional cues on U.S-China trade. The rupee opened at 69.74 versus the dollar compared with its previous close of 69.7350. While elections remain the main area of attention for the rupee, U.S.-China trade dispute remains the primary talking point for the rest of Asia. The Chinese ambassador to the European Union said that China could retaliate against the U.S. after last week Washington blacklisted Chinese telecom equipment provider Huawei Technologies. The Huawei ban last week came after Washington raised tariffs on $200 billion of Chinese goods and Beijing responded by raising duties on American imports. Worries over the intensifying trade dispute prompted a second day of decline on Wall Street on Monday. EUR/USD – The euro was effectively flat at $1.1166 after slipping to $1.1150 the previous day, its lowest since May 3. The single currency is expected to remain on a nervous footing the May 23-26 European parliamentary election. EUR/USD received a slight lift after the Chicago Fed's national activity index posted a big drop, indicating slower U.S. growth and weighing on Treasury yields and the dollar. German-U.S. 10-year spreads tightened, adding to EUR/USD's lift. But, traders should not expect price action to heat up with key risks coming later this week. EU elections begin Thursday, and investors will watch to see if populist and right-wing parties gain greater power, which would increase uncertainty for the euro zone. Economic data due Thursday are critical as well. German Q1 GDP, as well as Markit's May Manufacturing and Services PMIs, are set to be released. The data will update traders on euro zone growth recovery prospects. Disappointing PMIs will increase the odds of additional ECB stimulus and, thus, weigh on the euro.

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