USD/INR – The Indian rupee opened lower against the dollar on better-than-expected U.S. services and housing data. The rupee opened at 70.59 against the dollar compared with its previous close of 70.4850. The dollar index rose for the fifth straight session yesterday after the Institute for Supply Management Non-manufacturing index for February rose more than expected and new single-family home sales climbed to a seven-month high in December. The February U.S. ISM non-manufacturing index rose to 59.7, compared with the 57.3 reading expected. December new-home sales increased by 3.7% on-month, against the 8.7% decline expected. For the rupee, a lot will hinge on how Indian equities perform in the lead up to the national elections. Foreign flows will be closely watched.
EUR/USD – The euro was down a shade at $1.1295, hovering near two-week lows versus the greenback amid bets that the European Central Bank meeting on Thursday would indicate a delay in raising rates until next year and soon re-launch long-term bank loans to fight an economic slowdown. EUR/USD traders are unimpressed by Europe’s economic green shoots. Upside surprises to German, French and Italian February services PMIs might have been expected to lift the currency pair, but price action suggests traders see bearish risks from the ECB and Fed. After tomorrow’s ECB meeting, Draghi is likely to strike a dovish tone as euro zone manufacturing PMIs remain weak and GDPs have been soft, with Italy now in a technical recession. The latest ECB growth and inflation projections are expected to downgrade previous expectations, but generally anemic EZ growth could lead to deeper forecast adjustments than the market has factored in.
GBP/USD– Sterling recovered from the fall that happened after the opposition Labour party’s finance spokesman was quoted as saying few lawmakers would back Prime Minister Theresa May’s proposed Brexit deal, and there was little sign of a breakthrough in talks with Brussels. The British currency has dropped this week, reversing some of last week’s surge, as traders book profits and investors turn nervous again about the sort of divorce Britain and the European Union will have and when – or possibly even if – it will occur. The pound was also hurt by media reports that Michel Barnier, the EU’s chief negotiator, and Britain’s attorney general and Brexit minister were unlikely to make significant headway in talks in Brussels over tweaks to the deal demanded by hard-line Brexiteers in May’s Conservative Party. The pound, unchanged earlier in the day, dropped 0.6% yesterday to a one-week low of $1.3097 before recovering to $1.3145.
USD/JPY – Against the yen, the dollar was down a tad at 111.80 yen. Bank of Japan board member Yutaka Harada said on Wednesday the central bank must ramp up stimulus without delay if risks to the economy threaten achievement of its inflation target. Harada, a vocal advocate of aggressive monetary easing, said Japan’s economy was facing growing risks, including from slowing demand in China, simmering trade tensions, volatile stock price moves and weak private consumption. He added that subdued inflation could heighten views among the public that prices won’t rise much and delay achievement of the BOJ’s 2 percent inflation target.
Currency Range for today
Important data releases today
|6:45 PM||USD||ADP Nonfarm Employment Change (Feb)||189K||213K|
|9:00 PM||USD||Crude Oil Inventories||1.203M||-8.647M|