Published on 14/03/2017 10:51:37 AM | Source: Sharekhan

Yen advances on safe haven demand - Sharekhan

Posted in Currency Report | #Currency Tips #Sharekhan


US DOLLAR INDEX (DX)

US Dollar depreciated by 0.53 percent in yesterday’s trading session against basket of six major currencies as the traders remained cautious ahead of FOMC meeting. However, sharp downside was cushioned on the back of upbeat job data from US. Non-Farm payrolls data showed that 235000 jobs were added in the economy in February.

 

USD-INR:

The Indian Rupee appreciated by 0.17 percent on Friday’s trading session as foreign banks was seen selling Dollars. Further, market sentiments improved after exit polls showed victory for BJP in Uttar Pradesh. Further, continued FII inflows into local shares supported Rupee. Benchmark stock index 50 shares Nifty Index increased by 0.08 percent to 8934.55. FII’s net bought stocks worth Rs 412.14 crores yesterday as per provisional data from NSE. However, sharp gain was prevented as investors remained cautious ahead of IIP data. In Intraday Indian Rupee touched a high of 66.56 and closed at 66.60 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 BJP victory in Uttar Pradesh. This state sends highest number of lawmakers in lower house. Ruling party BJP’s win in this crucial state boosted chances of existing Prime Minister Narendra Modi to win election again in 2019 and return to the power for second term. Further, victory will help Prime Minister to pass reforms quickly. Further, upbeat IIP data will support Rupee. However, sharp gain may be prevented on the back of strong dollar. Traders will remain cautious ahead of monetary policy meeting across major central Banks and Inflation data from India. As per CME Fedwatch traders are expecting 90 percent chance of rate hike by US Federal Reserve. India CPI is expected to rise 3.6 percent in February compared to 3.17 percent in January. USDINR March expected to trade in a range between 66.10 on lower side to 66.70 on higher side with downward trend.

 

EUR-INR:

Euro appreciated by 0.73 percent in yesterday’s trading session on the back of weak dollar and as European Central bank kept its monetary policy unchanged. Further, Reuters reported that some ECB policymakers had suggested raising rates from their current record lows before the end of the bank’s asset purchase stimulus program. However, sharp gain was capped on uncertainty over French elections. In intraday Euro touched a high of 1.0714 and closed at 1.0653 against Dollar.

 

Outlook:

Euro currency expected to trade with negative bias on the back of strong dollar and divergence in monetary policy. Further, dovish statements from officials may add downside pressure. ECB governing council member Jan Smets said last week’s policy meeting was not a signal of coming policy change. Bank of France Governor Francois Villeroy de Gallhau said rising inflation in the Euro zone was highly exaggerated. 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 and rate hike expectations in upcoming FOMC meet. Investors are concerns over political uncertainty in Europe. EURINR March expected to trade in a range between 70.50 on lower side to 71.20 on higher side with sideways trend.

 

GBP-INR:

Pound appreciated by 0.42 percent in yesterday’s trading session on the back of weakness in dollar. However, sharp gain was capped after Scotland’s First Minister Nicola Sturgeon demanded a fresh Scottish independence referendum between autumn 2018 and spring 2019. Further, weak economic data added to worries that Britain economy is losing momentum. Further, Uncertainty over when Britain will trigger article 50 added downside pressure. In intraday Pound touched a high of 1.2251 and closed at 1.2218 against Dollar.

 

Outlook:

Pound is expected to trade with negative bias on the back of strong dollar and downbeat economic data from UK. Dollar is gaining strength on upbeat economic data from US and rate hike expectations in upcoming FOMC meet. Weak economic data added to worries that Britain economy is losing momentum. Further, worries over uncertainty when Britain will start formal mechanism for Britain to leave EU will add downside pressure. Scotland’s First Minister Nicola Sturgeon demanded a fresh Scottish independence referendum between autumn 2018 and spring 2019. Traders will remain cautious ahead of monetary policy meeting across major central Banks. Bank of England is expected to keep its monetary policy untouched whereas US Federal Reserve is likely to raise rates in its upcoming policy. GBPINR March expected to trade in a range between 81.20 on lower side and 81.90 on higher side with sideways trend.

 

JPY-INR:

Japanese Yen appreciated by 0.03 percent in yesterday’s trading session on the back of weakness in dollar and as the demand for safe haven improved ahead of monetary policy across major central banks. However, sharp gain was prevented on divergence in monetary policy. US Federal Reserve is expected to hike rate in its upcoming meet whereas Bank of Japan is likely to continue with it’s lose monetary policy. Further, disappointing data from Japan added downside pressure. In intraday Yen touched a high of 114.46 and closed at 114.87 against Dollar.

 

Outlook:

Yen is expected to trade with negative bias on the back of strong dollar and disappointing economic data from Japan. Divergence in monetary policy will hurt Yen. US Federal Reserve is expected to hike rate in its upcoming meet whereas Bank of Japan is likely to continue with it’s lose monetary policy. Demand for Dollar may go up on upbeat economic data from US and rate hike expectations in upcoming FOMC meet. However, sharp downside may be prevented as 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. JPYINR March expected to trade in a range between 57.50 on lower side and 58.40 on higher side with downward trend. 

 

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