Jun 14 2018

Rupee opens higher as renewed trade war worries overshadow FED’s hawkish stance

Financial Market Overview

14th June, 2018

Morning Coffee:-                                                                                  

MARKETS AT OPEN:-

Rupee:-

  • Indian rupee opened higher against the dollar at 67.54, as renewed trade war worries hurt the outlook for the U.S. currency, overshadowing the Federal Reserve’s hawkish stance. Pair USDINR now at 67.60 against 67.64 previous close.
  • Data released last night showed that India’s current account deficit in the January-March quarter widened from the year-ago period, but moderated marginally from the corresponding quarter. For the March quarter, India‘s current account deficit stood at $13 billion, or 1.9% of gross domestic product, compared with $2.6 billion in the corresponding quarter a year earlier and $13.7 billion in the October-December quarter.
  • We expect the pair to tip in range between 67.45-67.68 today.

Indian Equities:-

  • Benchmark indices started off trade on a weak note after investors digested US Federal Reserve’s rate hike.
  • The 30-share BSE Sensex fell 93.70 points to 35,645.46 and the 50-share NSE Nifty declined 35.30 points to 10,821.40.

Global Markets:-

  • Asian markets are lower today The Hong  Kong’s Heng Seng is down 0.62%, the Australian’s ASX 200 falls 0.17% and the Shanghai Composite is trading lower by 0.13%.
  • European markets finished mixed as of the most recent closing prices on Wednesday. The DAX gained 0.38%, while France’s CAC 40 was off 0.01%. Shares in London were unchanged with the FTSE 100 at 7,703.71.
  • US. stocks ended lower on Wednesday in a choppy session after the Federal Reserve raised interest rates as expected and projected a slightly faster pace of rate hikes in the coming months. The Dow Jones Industrial Average fell 117.74 points, or 0.46 percent, to 25,202.99, the S&P 500 lost 11.19 points, or 0.40 percent, to 2,775.66 and the Nasdaq Composite dropped 8.10 points, or 0.11 percent, to 7,695.70.
  • On Wednesday, the Fed raised interest rates by a quarter percentage points, an outcome that was well discounted by the markets. The main focus of market participants was on the central bank’s dot plots and its outlook on U.S. inflation and economy. The dot plot revealed that that eight policy makers now expected four or more quarter-point rate increases this year as compared with seven in March. The median dot for the current year shifted higher to 2.375% against 2.125% previously. For next year, it moved higher to 3.125% from 2.875%. As regards inflation and the economy, the Fed raised its 2018 GDP forecast to 2.8% and core PCE (personal consumption expenditure) projections to 2%.
  • US. President Donald Trump’s interview to Fox News, that he will confront China over trade in the coming weeks. Further, the Wall Street Journal reported that the Trump administration is preparing to levy tariffs on billions of Chinese goods and the actions may come as early as Friday. The U.S. had last month said that it could release by Friday the final list of Chinese products that would be subject to tariffs.