Rupee Opens Flat With Focus On Oil, US Rate Outlook

Rupee Opens Flat With Focus On Oil, US Rate Outlook

14 Jun 2019 09:10 AM

USD/INR – The Indian rupee opened little changed against the dollar with traders eyeing crude oil prices and prospects of an interest rate cut by the Federal Reserve at next week’s meeting. The rupee opened at 69.51 to the dollar at opening compared with its previous close of 69.51. Brent crude edged higher in Asia trading on Friday to $61.34 per barrel, adding to yesterday’s 2.2% climb. The nearest-month Brent futures surged above $62.50 yesterday following an attack on two oil tankers near the Gulf of Oman. Yesterday’s incident was the second in the strategic area in about a month. U.S. Secretary of State Michael Pompeo blamed Iran for the attack. The U.S. military released a video it said showed Iran's Revolutionary Guard (IRGC) removing an unexploded mine from the side of one of the two oil tankers attacked earlier in the day.

EUR/USD – The euro edged up 0.03% to $1.1280, holding up after falling during the past two sessions, though it was still set for a weekly loss of 0.44%. Despite downbeat U.S. weekly claims, EUR/USD is sliding under the weight of market expectations about ECB policy. Euro zone 5y5y inflation swaps trade near record lows and show few signs of rebounding. The downside surprise to euro zone industrial production and growth warnings from the IMF should keep inflation expectations anchored. Additional weight comes from trade concerns. President Trump's threat to impose sanctions over Russia's Nord Stream 2 pipeline increased downside risks to EUR/USD due to worries that any such measures could hamper euro zone growth.

GBP/USD – Versus the dollar, the pound was broadly steady at $1.2681 after Boris Johnson won by far the most support from Conservative lawmakers in the first round of the contest to replace Prime Minister Theresa May. Johnson, the face of the official campaign to leave the European Union in the 2016 referendum, won the support of 114 Conservative lawmakers in the first round of the contest to replace May. Currency markets were little moved despite the large gap between Johnson and Jeremy Hunt, the foreign minister who won 43 votes, coming a distant second, with markets waiting for the results of further rounds of voting. Broader market sentiment has also conclusively turned negative against the British pound in recent weeks with net speculative positions flipping towards a bearish position as concerns about Britain crashing out of the European Union without a deal has grown.

USD/JPY – Against the yen, the dollar dipped 0.05% to 108.34 yen. The yen showed little reaction to the latest round of trade negotiations between Tokyo and Washington on Thursday. Japan and the United States deepened their understanding over each other's position on trade and will continue discussions, Japan's economy minister Toshimitsu Motegi said after meeting with U.S. Trade Representative Robert Lighthizer. Motegi said the two would probably meet again ahead of the G20 summit meeting in Osaka, Japan late this month. Despite indications the U.S. and China are preparing for a prolonged dispute over trade and other issues dimming the global economic prospects, the USD/JPY's downtrend has stalled because for global asset managers there are no alternatives to relatively high-yielding, safe and liquid Treasuries.

Currency Range for today

Currency Pair Lower Upper
USD/INR 69.30 69.80
EUR/INR 77.90 78.70
GBP/INR 87.70 88.50
JPY/INR 0.6385 0.6445

Important data releases today

Time Ccy Event Forecast Previous
12:00 PM INR WPI Food (YoY) (May) - 7.37%
12:00 PM INR WPI Fuel (YoY) (May) - 3.84%
12:00 PM INR WPI Inflation (YoY) (May) 3.10% 3.07%
12:00 PM INR WPI Manufacturing Inflation (YoY) (May) - 1.72%
6:00 PM USD Core Retail Sales (MoM) (May) 0.5% 0.1%
6:00 PM USD Retail Sales (MoM) (May) 0.7% -0.2%

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