Published on 20/03/2017 11:49:18 AM | Source: Sharekhan

Yen gains on safe haven demand - Sharekhan

Posted in Currency Report | #Currency Tips #Sharekhan


US DOLLAR INDEX (DX)

US Dollar appreciated by 0.11 percent on Friday’s trading session against basket of six major currencies but remained near its five week low as traders were disappointed after central bank sticks to its previous outlook of 2 more rates this year and three more hikes in 2018. However, sharp downside was cushioned on the back of upbeat economic data from US. US Prelim UoM consumer sentiment index improved to 97.6 in March compared to 96.3 in February

 

USD-INR:

The Indian Rupee depreciated by 0.08 percent on Friday’s trading session tracking weakness in other Asian currencies. However, sharp downside was prevented on rise in risk appetite in the domestic markets and continued FII inflows into local shares. Additionally, upbeat economic data supported Rupee. Benchmark stock index 50 shares Nifty Index increased by 0.07 percent to 9160.05. FII’s net bought stocks worth Rs 1532.39 crores yesterday as per provisional data from NSE. In Intraday Indian Rupee touched a low of 65.6475 and closed at 65.4750 against Dollar.

 

Outlook:

Indian Rupee is expected to trade with positive bias on the back of rise in risk appetite in the domestic markets. Market sentiments improved after BJP victory in UP and as Goods and services (GST) council gave its nod to two remaining pieces of supporting legislation for implementing tax reform. Further, continued FII inflows into local shares and upbeat economic data from country will support Rupee. However, sharp gain may be prevented as the demand for dollar may improve on divergence in monetary policy. US Federal Reserve is the only major central bank tightening policy. Upbeat economic data from US will be dollar supportive. USDINR March expected to trade in a range between 65.20 on lower side to 65.80 on higher side with sideways trend.

 

EUR-INR:

Euro depreciated by 0.26 percent on Friday’s trading session as poll showed far-right anti EU leader Marine Le Pen extending her lead over centrist Emmanuel Macron in the first round of France’s presidential elections. However, sharp downside was cushioned as ECB president Mario Draghi said bank saw less urgency of monetary easing to support economic growth and spur inflation. In intraday Euro touched a low of 1.0726 and closed at 1.0736 against Dollar.

 

Outlook:

Euro currency expected to trade with negative bias on worries over political uncertainty in France. Poll showed far-right anti EU leader Marine Le Pen extending her lead over centrist Emmanuel Macron in the first round of France’s presidential elections. Further, divergence in monetary policy may add downside pressure. 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 policymaker’s speeches. Demand for Dollar may go up on upbeat economic data from US. EURINR March expected to trade in a range between 70.10 on lower side to 71.05 on higher side with sideways trend.

 

GBP-INR:

Pound appreciated by 0.27 percent on Friday’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. However, sharp gain was capped on uncertainty over when Britain will trigger article 50. In intraday Pound touched a high of 1.2404 and closed at 1.2392 against Dollar.

 

Outlook:

Pound is expected to trade with negative bias on the back of divergence in monetary policy. US Federal Reserve is the only major central bank tightening policy. Fed 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. However, sharp downside may be prevented on expectation of rise in interest rates after one of the policy maker Kristen Forbes voted unexpectedly to hike interest rates. GBPINR March expected to trade in a range between 80.50 on lower side and 81.5 on higher side with sideways trend.

 

JPY-INR:

Japanese Yen appreciated by 0.52 percent on Friday’s trading session on the back of weakness in dollar and as the Bank of Japan kept its benchmark interest rates at minus zero. Further, demand for safe haven improved on worries over political uncertainty in France after Poll showed far-right anti EU leader Marine Le Pen extending her lead over centrist Emmanuel Macron in the first round of France’s presidential elections. In intraday Yen touched a high of 112.53 and closed at 112.70 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 57.70 on lower side and 58.50 on higher side with upward trend.

 

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