Mar 15 2019

Rupee Opens Little Changed Amid Trade Uncertainty, Fund Inflows

USD/INR – The Indian rupee, in-line with other Asian currencies, is expected to open little changed against the dollar amid a delay in the trade meeting between the leaders of the U.S. and China and ongoing foreign portfolio inflows into domestic assets. The rupee opened at 69.33 against the dollar compared with its previous close of 69.3525. U.S. Treasury Secretary Steven Mnuchin reportedly said that a meeting between U.S. President Donald Trump and Chinese President Xi Jinping will not happen by the end of this month, as was previously planned. Rupee is the top performing major Asian currency in March so far and Indian equities are among the best performers in Asia, helped by the over $2 billion of foreign inflows into the nation’s shares. Meanwhile, traders will continue to watch for the forward USD/INR premiums following Reserve Bank of India’s announcement that it will induct rupee liquidity via forex swaps.

EUR/USD – The euro eased to $1.1320 from Wednesday’s one-week high of $1.1339. EUR/USD’s rally off 2019’s low has stalled and the pair could be setting up to trade a 1.1175-1.1420 range, leaving it to next week’s Fed meeting can break the impasse. A period of consolidation is likely as the market digests short-term gains.  German-U.S. yield spreads are holding near recent tights as are Italian-German spreads, which supports EUR/USD. A break of the 1.1175-1.1420 range will likely have to wait until the Fed meeting. Recent U.S. data suggests economic growth is slowing, which could lead to a more cautious tone from Powell. If the Fed suggests growth is slowing more rapidly, U.S. rates should tumble as markets factor in greater chances of Fed rate cuts. EUR/USD could then rally and clear 1.1420.

GBP/USD–    The British pound paused for breath on Friday after the UK parliament voted overwhelmingly to seek a delay in Britain’s exit from the European Union. Sterling fetched $1.3245, having slipped further from Wednesday’s nine-month high of $1.3380, with its fall of 0.76% on Thursday. British lawmakers approved a motion setting out the option to ask the EU for a short delay if parliament can agree on a Brexit deal by March 20, or a longer delay if no deal can be agreed in time. The pound was mostly steady after the motion was passed late on Thursday. Before UK Prime Minister Theresa May meets EU leaders on Wednesday and Thursday, a new vote on her twice-rejected deal is likely next week.

USD/JPY – The yen slipped to a one-week low of 111.83 per dollar on Thursday partly on speculation that the BOJ could make a stronger show of its readiness to ease policy further at its review ending later on Friday. Still, most market players expect the BOJ to refrain from any drastic changes to its policy framework. The yen last stood at 111.60. The Bank of Japan is likely to stand pat on monetary policy on Friday but temper its optimism that robust exports and factory output will underpin growth, a nod to heightened overseas risks that threaten to derail a fragile economic recovery.

Currency Range for today

Currency Pair Lower Upper
USD/INR 69.00 69.50
EUR/INR 78.05 78.85
GBP/INR 91.30 92.10
JPY/INR 0.6175 0.6235

Important data releases today

Time Ccy Event Forecast Previous
3:30 PM EUR CPI (YoY) (Feb) 1.5% 1.5%
7:30 PM USD JOLTs Job Openings (Jan) 7.310M 7.335M