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July 21, 2015
Dollar made 3-month high on divergence in global monetary policy
News and development
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German PPI declined by 0.1 percent in June from 0.0 percent in May
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UK right move HPI increased by 0.1 percent in July from 3.0 percent in June
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Europe current account narrowed to 18.0B in May from 24.0B in April
US DOLLAR INDEX (DX)
INR pairs
Pair Name
Pre. close
Net Chg (%)
USD-INR
63.75
0.29%
EUR-INR
69.103
-0.13%
GBP-INR
99.17
-0.02%
JPY-INR
51.33
0.16%
Major indices
Indices
Pre. close
Net Chg (%)
18100.41
0.08%
Nifty
8603.45
-0.07%
Dax
11735.72
0.53%
Nikkei
20650.92
0.25%
Dow Jones
Major currencies
Currency
LTP
EUR-USD
1.0822
GBP-USD
1.5558
USD-JPY
124.3010
Commodities
Commodity
Brent crude USD/bbl
LTP
56.65
Gold USD/t oz
1096.5
LME 3-month copper
5480.0
US Dollar increased by 0.06 percent in yesterday’s trading session against other
major currencies. Dollar made 3 month high on expectation of early rate hike by
US Federal Reserve. Demand for dollar increased after robust economic data from
US. US CPI rose 0.3 percent in June.
USD-INR: The Indian rupee depreciated by 0.30 percent in yesterday’s trading
session on the back of strong dollar coupled with rise in risk aversion in the domestic markets. Further, expectation of early rate hike by US Federal Reserve
proved negative for rupee. However, sharp fall was prevented as crude oil prices
plunged. Lower crude oil prices may be positive for currency as oil import is
major contributors to trade deficit. Further, investors got relief after Greece
opened its banks and begun to repay debts. In intraday Indian Rupee touched a
low of 63.6650 and closed at 63.66 against Dollar.
Outlook: Indian Rupee is expected to trade with negative bias on the back of
strong dollar and weak macro economic data. Demand for dollar may increase on
the back of expectation of early rate hike by US Federal Reserve. Robust economic data from the US fuelled the speculation that US Fed may hike rates in
September. Indian Rupee may track weakness in other Asian currencies. Month
end dollar demand from importers may impact Rupee. However, plunge in crude
oil prices and some positive developments in Greece may prevent sharp fall in
rupee. Investors will remain cautious ahead of economic data’s from US and
developments in Greece. USDINR July expected to trade in a range between
63.55 on lower side to 64.0 on higher side with sideways up trend.
EUR-INR: Euro depreciated by 0.05 percent in yesterday’s trading session on the
back of strong dollar. Dollar gained strength after robust economic data from US
and hawkish statement from Fed officials. However, euro found support on positive developments in Greece. After the positive developments investors expect
less chances of Greece exit. Banks in Greece reopened after more than 2 weeks
and Greece made repayment of 4.2B loan to ECB. A euro 7 billion short-term
financing package has been agreed to keep Greece afloat until the new bailout
can be finalized. In intraday Euro touched a low of 1.0807 and closed at 1.0822
against Dollar.
Outlook: Euro currency expected to trade with negative bias on the back of
strong dollar coupled with unfavorable economic data from Europe. Further,
divergence in global monetary policy will add downside pressure. US Federal
morning view (currency)
Reserve is likely to raise interest rates sooner this year, whereas European Central Bank continued with its loose monetary stance
to fight against deflation and revive economic growth. Demand for dollar may go up after robust economic data from US and as
Fed chair Yellen in the previous week restated U.S is on track to raise interest rate this year. However, sharp fall may be prevented
on positive developments in Greece. Banks in Greece reopened after more than 2 weeks and Greece made repayment of 4.2B loan
to ECB. EURINR July expected to trade in a range between 68.6 on lower side and 69.9 on higher side with sideways down trend.
GBP-INR: Pound depreciated by 0.27 percent in yesterday’s trading session on the back of strong dollar. Further, weak economic
data from the country added downside pressure. However, sharp fall in pound was cushioned as the Bank of England Governor Mark
Carney said that the time for rate increases is moving closer. In intraday Pound touched a low of 1.5535 and closed at 1.5558 against
Dollar.
Outlook: Pound likely to remain under pressure as market anticipates early rate hike by both the countries. US Federal Reserve
is likely to hike rates sooner this year after robust economic data’s and hawkish statement from Fed officials. While, Bank of
England is also expected to increase rates sooner after Bank of England Governor Mark Carney said that the time for rate increases
is moving closer. Weak economic data from the country will add downside pressure. GBPINR July expected to trade in a range
between 98.60 on lower side and 99.8 on higher side with sideways trend.
JPY-INR: Japanese Yen depreciated by 0.20 percent in yesterday’s trading session on the back of Divergence in the global monetary
policy. Demand for safe haven receded due to rise in risk appetite in the global markets and positive developments in Greece.
Banks in Greece reopened after more than 2 weeks and Greece made repayment of 4.2B loan to ECB. In intraday Yen touched a low
of 124.4380 and closed at 124.3010 against Dollar.
Outlook: Yen is expected to trade with negative bias on the back of divergence in monetary policy. U.S Federal Reserve is
expected to raise interest rates later in this year whereas; Bank of Japan is likely to continue with its loose monetary policy until
it achieves its 2 percent Inflation target. Demand for dollar over Yen may rise on the back of robust economic data from US and
hawkish statements from US Fed officials.”Demand for safe haven may be receded due to rise in risk appetite in the global
markets and some positive developments in Greece. However, Bank of Japan Meeting minutes showed that Several Bank of Japan
board members said the impact of the bank's massive stimulus might be fading. JPYINR July expected to trade in a range between
50.9 on lower side and 51.50 on higher side with sideways down trend.
Global economic data
Data
Public Sector Net Borrowing
Country
Date
Time
Expected
Previous
Impact
UK
21/7/2015
2:00pm
8.6B
9.4B
Medium
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July 21, 2015