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.

GBP/USD – Sterling inched away from its weakest levels since January on Monday as Britain's prime minister made a last-ditch bid to get a Brexit deal through parliament before she leaves office, though scepticism from the opposition Labour Party capped gains. After failing three times to get parliament's approval for her EU divorce deal, Theresa May said she would present a "new, bold offer" to lawmakers with "an improved package of measures" in a final attempt to secure a Brexit deal. Though there is widespread scepticism that any such deal will get ratified by lawmakers, sterling rose 0.1% higher against the dollar to $1.2732. That followed a drop of 2.2% last week, its worst week since October 2017.

USD/JPY – The dollar stood unchanged at 110.20 yen after being nudged off a two-week high of 110.32 scaled the previous day. The rebound from last Monday's low to today's high was partly based on hope the U.S. and China will eventually come to a trade agreement, but the U.S. move to blacklist Huawei is having ripple effects in both countries and could make life difficult for major U.S. companies doing business in China. The market focus is shifting toward what the U.S. and China are not putting tariffs on yet, because those are the most disruptive and needs-based items, which, if targeted in one form or another, would force further yen haven gains.

Currency Range for today

Currency Pair Lower Upper
USD/INR 69.50 70.00
EUR/INR 77.40 78.20
GBP/INR 88.35 89.15
JPY/INR 0.6295 0.6355

Important data releases today

Time Ccy Event Forecast Previous
6:30 PM USD Existing Home Sales (Apr) 5.35M 5.21M

 

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