Mar 07 2019

Rupee Opens Higher, Tracking Asian Peers

USD/INR – The Indian rupee opened higher against the dollar amid a slowdown in U.S. private sector hiring and dovish comments from a Federal Reserve official. The rupee opened at 70.08 against the dollar with its previous close of 70.28. The rupee closed at a two-month high yesterday on the back of seasonal and portfolio inflows. The dollar edged lower against most Asian currencies on Thursday after the dollar index ended little changed yesterday. The dollar index’s quiet performance came after data released yesterday revealed that U.S. private payrolls increased by 183,000 in February, down from the upwardly revised 300,000 additions in the previous month against expectations of 189,000 job additions. The dollar on Wednesday was not helped by comments from New York Federal Reserve President John Williams who said the U.S. central bank can afford to be flexible in light of various uncertainties.

EUR/USD – The euro trod water at $1.1305, about 1% below a one-month high hit on Thursday last week. Some traders expect the ECB will indicate a delay in raising rates until next year and the central bank will soon re-launch long-term bank loans to fight an economic slowdown. EUR/USD hit a new one-week low today but bears couldn’t clear the February 19 low, suggesting traders have effectively priced in expectations that the ECB will revise down December’s growth and inflation forecasts and Draghi will strike a cautious tone. ADP and trade balance downside surprises weakened the dollar and EUR/USD bounced. A report cited sources saying the ECB will extensively downgrade 2019 growth and inflation projections while inflation projections through 2021 will be cut as well.

GBP/USD– The pound was stuck near a one-week low at $1.3180 as a deadlock over Brexit fuelled concern that a vote on Prime Minister Theresa May’s proposed deal for Britain’s EU departure could be delayed. Talks with European Union negotiators aimed at winning concessions for Britain on Brexit have made no headway and no swift solution is in sight, EU officials said on Wednesday. Most economists thought Brexit would be delayed by a few months and the two sides would eventually agree a free-trade deal. May has offered lawmakers a chance to seek to delay Brexit if parliament rejects her deal in a vote she has promised to hold by March 12.

USD/JPY The USD/JPY uptrend has hit an impasse near 112 despite resilient U.S. labor data and quickening service sector expansion, because this year’s big recovery in risk-taking needs new global growth indications to avoid profit taking. Lingering concerns about U.S. trade policy, Brexit, falling U.S. fiscal stimulus and structural impediments to better growth in China, Japan and Europe dampen DM rates, including Treasuries. The Fed’s tightening pause also limits rebounds in Treasury yields and the rates-sensitive USD/JPY. A strong U.S. jobs report Friday would be bullish, but only if it doesn’t spook the already twitchy global rerisking trade. Today’s beige book will reveal whether business morale improved since the somewhat dour previous report, now that the government shutdown ended and a trade deal with China is seen more likely. USD/JPY was last trading at 110.70.

Currency Range for today

Currency Pair Lower Upper
USD/INR 69.80 71.30
EUR/INR 78.70 79.50
GBP/INR 91.90 92.70
JPY/INR 0.6230 0.6290

Important data releases today

Time Ccy Event Forecast Previous
6:15 PM EUR Deposit Facility Rate -0.40% -0.40%
6:15 PM EUR ECB Marginal Lending Facility 0.25% 0.25%
6:15 PM EUR ECB Interest Rate Decision (Mar) 0.00% 0.00%