Published on 17/03/2017 12:06:20 PM | Source: Sharekhan

Pound advances after BOE policy meet - Sharekhan

Posted in Currency Report | #Currency Tips #Sharekhan


US DOLLAR INDEX (DX)

US Dollar depreciated by 0.40 percent in yesterday’s trading session against basket of six major currencies as traders were disappointed after central bank sticks to its previous outlook of 2 more rates this year and three more hikes in 2018. US Federal Reserve after raising rates by 0.25 percent signaled more gradual pace of monetary tightening this year. However, sharp downside was cushioned on the back of upbeat economic data from US. US housing starts increased by 3.0 percent to 1.29M units in February and number of people filing for jobless claims declined by 2000 to 241K for week ending 11th March.

 

USD-INR:

The Indian Rupee appreciated by 0.46 percent in yesterday’s trading session on rise in risk appetite in the domestic markets and continued FII inflows into local shares. Market sentiments improved after BJP victory in Uttar Pradesh. Additionally, upbeat economic data supported Rupee. Dollar showed weakness after US Federal Reserve disappointed traders by sticking to its previous outlook of 2 more rates this year and three more hikes in 2018. US Federal Reserve raised rate by 0.25 percent and signaled more gradual pace of monetary tightening this year. Benchmark stock index 50 shares Nifty Index increased by 0.76 percent to 9153.7. FII’s net bought stocks worth Rs 1360.1 crores yesterday as per provisional data from NSE. In Intraday Indian Rupee touched a high of 65.24 and closed at 65.41 against Dollar.

 

Outlook:

Indian Rupee is expected to trade with positive bias on the back of rise in risk appetite in the domestic markets and continued FII inflows into local shares. Further, upbeat economic data will support Rupee. However, sharp gain may be prevented on the back of rise in demand for dollar. Dollar may gain strength as US Federal Reserve increase rate by 0.25 percent and indicated more rate hike in the coming months. Upbeat economic data from US will be dollar supportive. USDINR March expected to trade in a range between 65.20 on lower side to 65.90 on higher side with sideways trend.

 

EUR-INR:

Euro appreciated by 0.27 percent in yesterday’s trading session on the back of weak dollar and as European Central bank kept its monetary policy unchanged. Further, in Dutch election Prime Minister Mark Rutte’s VVD party won against anti-Islam and anti-EU Geert wilders, this eased the uncertainty in Netherlands. In intraday Euro touched a high of 1.077 and closed at 1.0764 against Dollar.

 

Outlook:

Euro currency expected to trade with positive bias in the early trading session as political uncertainty in Netherlands eased after Prime Minister Mark Rutte’s VVD party won parliamentary election against anti-Islam and anti-EU Geert wilders. However, in the later trading session Euro may trade with nega tive bias on the back of divergence in monetary policy. US Federal Reserve raise interest rates by 0.25 percent to a range of 0.75 percent to 1.0 percent whereas, European Central Bank continued with its loose monetary policy. US Federal Reserve signaled more rate hikes in the coming months whereas ECB restated that central bank may extend period of bond purchasing program if required. Traders will remain cautious ahead of economic data from Euro Area and US. Demand for Dollar may go up on upbeat economic data from US. Investors are concerns over political uncertainty in France. EURINR March expected to trade in a range between 70.0 on lower side to 70.70 on higher side with sideways trend

 

GBP-INR:

Pound appreciated by 0.53 percent in yesterday’s trading session on the back of weakness in dollar and as Bank of England kept its monetary policy untouched. Further, pound gained strength after one of the policymaker Kristen Forbes voted unexpectedly to raise interest rates. Central Banks monetary policy meeting minutes showed that some officials might be closed to supporting rate hike to fight rising inflation. Additionally, upbeat job data from UK may support pound. However, sharp gain was capped on uncertainty over when Britain will trigger article 50. In intraday Pound touched a high of 1.2376 and closed at 1.2358 against Dollar.

 

Outlook:

Pound is expected to trade with positive bias in the early trading session on expectation of rise in interest rates after one of the policy maker Kristen Forbes voted unexpectedly to hike interest rates. However in the later trading session pound may trade with negative bias on the back of divergence in monetary policy. US Federal Reserve raise interest rates by 0.25 percent to a range of 0.75 percent to 1.0 percent whereas; Bank of England continued with its loose monetary policy. Further, worries over uncertainty when Britain will start formal mechanism for Britain to leave EU will add downside pressure. GBPINR March expected to trade in a range between 80.20 on lower side and 81.10 on higher side with sideways trend.

 

JPY-INR:

Japanese Yen appreciated by 0.04 percent in yesterday’s trading session on the back of weakness in dollar and as the Bank of Japan kept its benchmark interest rates at minus zero. In intraday Yen touched a high of 112.89 and closed at 113.3 against Dollar.

 

Outlook:

Yen is expected to trade with positive bias as the demand for safe haven may improve on rise in risk aversion in the domestic markets. Further, demand for safe haven may increase on political uncertainty in Europe, concern over Greece bailout, worries over British exit from EU and new Scottish independence referendum vote. However, sharp gain may be prevented on divergence in monetary policy. US Federal Reserve raise interest rates by 0.25 percent to a range of 0.75 percent to 1.0 percent whereas Bank of Japan continued with its lose monetary policy. JPYINR March expected to trade in a range between 57.60 on lower side and 58.20 on higher side with upward trend.

 

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