In the last week, the Indian Rupee spot strengthened by 0.35 percent owing to:
* Weak US Dollar Index which fell by 0.90 percent in the last week on account of dovish outlook given by the US Fed Chair in her recent testimony for the US interest rates thereby giving a chance to the emerging markets to enjoy investor’s attention.
* Not only this, disappointing release of consumer prices and retail sales data from the US raised doubts about America’s economic growth and whether the Federal Reserve may raise rates again in 2017.
* On the domestic front, persistent selling of the US Dollar by exporters and banks provided strength to the currency.
* Robust release of economic datasets further acted as a positive factor.
* India's trade deficit narrowed more-than-expected to $12.96 billion in June’17.
* Inflation rate plunged to 1.54 percent in June’17 from previous month’s 2.18 percent.
* From a weekly perspective, USDINR spot (CMP – 64.35) is expected to appreciate towards 64.10 as weakness in US Dollar Index will provide some support to the Indian Rupee. Plus, huge inflows of foreign funds will act as a positive factor.
* In the last week, EURINR spot surged by 0.14 percent on account of weakness in the American currency after the release of CPI and retail sales data.
* Furthermore, the German Chancellor Angela Merkel stated that she was open to the creation of a finance minister and budget for the Euro-zone as proposed by French President Emmanuel Macron.
* France’s top central banker has pleaded with Germany to loosen its fiscal policy as part of a deal with his country to strengthen the Euro-zone.
* From a weekly perspective, EURINR spot (CMP –73.75) is expected to trade higher towards 74.20 as markets play prior to the ECB Monetary Policy Meeting which is to be held on 20th July’17.
* There is no expectation of change in policy however markets will pay close attention to President Draghi's remarks after his surprising comment in June’17 which was on Euro-zone’s deflationary pressures being replaced by reflationary forces.
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