Mar 08 2019

Rupee Opens Lower On Global Risk-Off Amid Growth Concerns

USD/INR – The Indian rupee opened lower against the dollar after the European Central Bank’s cut in growth forecast prompted losses in equities worldwide and in regional currencies. The rupee opened at 70.17 against the dollar compared with its previous close of 69.9950. Asian assets came under pressure on Friday amid losses in U.S. and European equities after the ECB cut its growth forecast for the current year to 1.1% from an earlier 1.7%. ECB chief Mario Draghi said geopolitical factors and the threat of protectionism had dented economic sentiment and tilted the risks to the economy to the downside.

EUR/USD – The euro struggled near a 21-month low against the dollar on Friday, hurt by a series of dovish signals from the European Central Bank, with the currency market bracing for further volatility ahead of U.S. jobs data later in the day. The single currency stood little changed at $1.1197 having tumbled 1 percent on Thursday to touch $1.1176, its lowest since June 2017. The euro took a big hit on Thursday after the ECB pushed back the timing of its first post-crisis interest rate hike to 2020, cut its economic forecasts and launched a new round of cheap bank loans. The February U.S. jobs report to be released as could stack more pressure on the floundering euro.

GBP/USD– Sterling recorded its steepest loss against the dollar in seven weeks after British and European Union sources said Brexit negotiations had hit an impasse. Nothing suggests anything will change in Britain’s Brexit talks with the European Union over the next 48 hours, a British government source said on Thursday, adding that the EU was simply not moving. EU Brexit negotiators rejected the latest proposals on the Irish backstop presented by Britain’s Attorney General Geoffrey Cox in Brussels on Tuesday and told him to rework them and come back on Friday, EU diplomats said. The pound touched $1.3067, the lowest level since Feb. 25. GBP/USD was last trading at $1.3090.

USD/JPY The greenback was effectively flat at 111.35 yen after dipping 0.15% against its Japanese peer overnight amid risk aversion in broader markets. Global equities were lower after the ECB stoked economic growth concerns. The yen, a perceived safe haven, attracts demand in times of political tensions and market turmoil. Ministry of Finance data shows Japanese investors have been pickier in Europe. Net selling of German bonds since late last year looks set to continue on lower yields and capital gains. France is another story with net sales in December followed by buys in January. Light flows have been seen into Italy too. Spain looks popular now and a foray into Irish debt was evident in December. Moves into U.S. bonds should continue, with USD/JPY bought on dips and the currency portion left unhedged.

Currency Range for today

Currency Pair Lower Upper
USD/INR 69.9070.40
EUR/INR 78.1078.90
GBP/INR 91.4092.20
JPY/INR 0.62650.6325

Important data releases today

Time Ccy Event Forecast Previous
7:00 PM USD Building Permits (Jan) 1.289M 1.326M
7:00 PM USD Nonfarm Payrolls (Feb) 181K 304K
7:00 PM USD Unemployment Rate (Feb) 3.9% 4.0%