Feb 21 2019

Rupee Opens Little Changed Against The Dollar After Fed Minutes

USD/INR – The Indian rupee opened little changed against the dollar at 71.0750 to a dollar versus its previous close of 71.11. The Federal Reserve minutes revived expectations of at least one rate hike this year. The minutes of the U.S. central bank showed that the policymakers thought pausing on an interest rate hike last month posed little risk and plenty of benefits. The Fed emphasized the need for patience when it comes to monetary policy. The Fed minutes are less dovish than expected and the jump in crude oil prices above $67 level also poses a threat to the rupee. The Brent crude oil contract jumped 0.9% to $67.20 per barrel, amid upward pressure from supply cuts led by Organization of the Petroleum Exporting Countries.

EUR/USD – The dollar trimmed losses versus the euro after minutes from the Federal Reserve’s last meeting revived expectations for a possible U.S. rate hike this year while investors shifted their focus back to trade issues for fresh directional cues. The euro was little changed at $1.1342 after being nudged off a two-week high of $1.1371 scaled earlier on Wednesday. U.S.-China trade negotiation deadline could be extended and that may mean Europe could be faced with trade issues. U.S. President Donald Trump on Wednesday said the United States would impose tariffs on European car imports if it cannot reach a trade deal with the European Union.

GBP/USD – The pound dipped 0.15% to $1.3042 pulling back further from a near three-week high of $1.3109 touched the previous day. Sterling took a knock after three lawmakers defected from British Prime Minister Theresa May’s ruling Conservative party in a move that could undermine her Brexit strategy. The British currency fell to the day’s low of $1.3012 after the resignations and was down as much as 0.4% yesterday before recovering on comments by Spain’s foreign minister that a deal was in the process of being “hammered out.” Analysts said the defections had pressured the pound by reducing the government’s working majority in parliament and had increased the possibility of a snap election. The pound was also weighed after Fitch Ratings said on Wednesday it may downgrade the UK’s “AA” debt rating based on growing Brexit uncertainty.

USD/JPY – The greenback rose slightly against the yen after the Fed, in the minutes of its latest meeting in January, said the U.S. economy and its labour market remained strong, prompting some expectations of at least one more interest rate hike this year. The Fed caught markets off guard last month after it took a dovish turn in its commentary, widely read as a sign it would suspend a three-year campaign to raise interest rates. The market’s focal point will now shift back to trade. The U.S.-China trade negotiation deadline could be extended and that may mean Japan could be faced with trade issues. USD/JPY was last trading at 110.80.

Currency Range for today

Currency Pair Lower Upper
USD/INR 70.85 71.35
EUR/INR 80.10 80.90
GBP/INR 92.20 93.00
JPY/INR 0.6375 0.6435

Important data releases today

Time Ccy Event Forecast Previous
2:00 PM EUR German Manufacturing PMI (Feb) 50.0 49.7
7:00 PM USD Core Durable Goods Orders (MoM) (Dec) 0.2% -0.4%
7:00 PM USD Philadelphia Fed Manufacturing Index (Feb) 15.6 17.0
8:30 PM USD Existing Home Sales (Jan) 5.01M 4.99M
9:30 PM USD Crude Oil Inventories 3.080M 3.633M