US Dollar Index (DX):
US Dollar decreased by 0.03 percent in yesterday’s trading session against basket of six major currencies as traders remained cautious ahead of US inflation data and rising political uncertainty in US. However, sharp downside was prevented as US Fed Chair Yellen signaled gradual rate hike. She said US economy is healthy to withstand rate hikes and winding down of massive bond portfolio. Further, US jobless claims data showed that less number of people filled for claims. Initial jobless claims fell by 3000 in the week ended 7th July. In Intraday Dollar Index touched a low of 95.464 and closed at 95.728 against Dollar.
Dollar is expected to trade with the negative bias on the back of rising political uncertainty in US and as investors will remain cautious ahead of US inflation data. US inflation data will be watched carefully to get the hint on Federal Reserve direction on policy. Data is expected to show that inflation rose by 0.1 percent in June. However, sharp downside may be cushioned as US Federal Reserve chair Yellen said “The Fed continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time.”
Indian Rupee appreciated by 0.15 percent in yesterday’s trading session as US Federal Reserve Chair Yellen signaled gradual pace of rate hike. Further, rise in risk appetite in the domestic markets and ease in inflation supported Rupee. India CPI eased to 1.54 percent in June 2017 compared to 2.18 percent in May 2017. Benchmark stock index 50 shares Nifty Index increased by 0.77 percent to 9891.70. However, sharp gain was prevented on FII outflows from local shares. FII’s net sold stocks worth Rs 59.15 crores yesterday as per provisional data from NSE. In Intraday Indian Rupee touched a high of 64.3913 and closed at 64.445 against Dollar.
Indian Rupee is expected to trade with negative bias as traders will remain cautious ahead of Inflation data from US. Investors are concerned about tapering of liquidity after major central banks across the globe signaled a tighter monetary policy. Ease in inflation may provide room for Reserve Bank of India (RBI) to slash interest rates. The gap between US and India bond yields is narrowing. Rise in US yield prompts foreign investors to sell their Indian market holdings. USDINR July expected to trade in a range between 64.40 on lower side to 64.85 on higher side with sideways up trend.
Euro depreciated by 0.12 percent in yesterday’s trading session. However, sharp downside was prevented as demand for dollar declined after US Fed Chair Yellen signaled gradual rate hike. Further, traders speculate that European Central Bank may announce change in Quantitative easing policy in September. In intraday Euro touched a low of 1.1371 and closed at 1.1398 against Dollar.
Euro currency expected to trade with positive bias on the back of weakness in dollar and expectation of upbeat economic data from Euro Area. Further, expectation of unwinding of massive monetary stimulus by European Central Bank will support Euro. Traders will remain careful ahead of US inflation data. US inflation data will be watched carefully to get the hint on Federal Reserve direction on policy. EURINR July expected to trade in a range between 73.35 on lower side to 74.0 on higher side with upward trend.
Pound appreciated by 0.42 percent in yesterday’s trading session on the back of weak dollar. Further, Bank of England policymaker Ian McCafferty said central bank should consider unwinding of quantitative easing programme. However, sharp gain was prevented as traders are worried that disappointing data may prevent Bank of England from raising interest rates. In intraday Pound touched a high of 1.2955 and closed at 1.2939 against Dollar.
British pound is expected to trade with a positive bias on account of weakness in dollar and expectation of monetary tapering from central bank. However, sharp gains may be capped as disappointing economic data may fuel the worries over the country’s economic health. Traders will remain cautious ahead of Brexit negotiations. GBPINR July expected to trade in a range between 83.20 on lower side and 84.25 on higher side with upward trend.
Japanese Yen depreciated by 0.10 percent in yesterday’s trading session as the demand for safe haven declined on rise in risk appetite in the global markets. Further, divergence in monetary policy added downside pressure. Bank of Japan Governor Kuroda reiterated that the central bank pledge to keep government bond yields fixed near zero. In intraday Yen touched a low of 113.53 and closed at 113.28 against Dollar.
Yen is expected to trade with negative bias on divergence in monetary policy. Spread between 10 year US treasury yields and Japanese bond yields is widening. Traders will remain cautious ahead of comments from Federal Reserve officials and Inflation data for fresh cues on policy direction. JPYINR July expected to trade in a range between 56.50 on lower side and 57.20 on higher side with sideways down trend.
Indian bond yield decreased to 6.456 yesterday as ease in inflation fuelled the expectation of interest rate cut in Monetary Policy Committee’s review. However, sharp downside was prevented as Reserve Bank of India will sell 180 billion rupees worth bonds this week.
India bond yield may move downward as investors speculate that lower retail inflation may prompt monetary policy committee to cut rate in near future. However, sharp downside in yield may be prevented as RBI will sell 180 billion rupees worth government securities today. It may also track upside in global bond yields. IRF July 7.59% 2026 expected to trade in a range between 104.70 on lower side and 105.40 on higher side with upward trend.
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