29th April 2019
Today Indian markets are closed for Mumbai election day. However, in NDF INR trading at 69.81.
This is sharp retracement from 70.33 levels traded at NDF on Friday driven by Trump’s comment on OPEC and Oil which pushed Brent to 71.92 now from 75.72 peak of last week.
Trump said he called OPEC and asked them to bring down the prices.
On USDINR, Election outcome as indicated by exit polls on 19th May and final results on 23rd May, will be a larger deciding factor for a knee jerk move. For specific recommendations on hedging, we are reaching out to you specifically.
US Quarter I GDP growth came as 3.2% annualized and that keeps Dow and global market sentiments positive.
30 Th April 2019
INR likely to open around 69.80
Trump’s comment on oil price would help INR, as Brent has now settled around 71.30 level from a high of above 75. The Dollar is mildly weaker against EUR and JPY. EUR is trading at 1.1185 and JPY at 111.67.
This week is a busy week for currencies. The FOMC statement is due tomorrow. The US Non-farm payroll is released on Friday. The Fed statement and the press conference would be looked at for any hints of a rate cut. With the latest GDP at 3.2% it is unlikely that the Fed would want to even start a discussion on rate cuts. But given their complete dovish turn, nothing can be ruled out.
Brent move is positive for INR, and the recent top of 70.25 level could now become resistance in the short term. The big move looks possible only post the elections.
2nd May 2019
INR likely to open around 69.60
The Dollar is stronger after the FOMC press statement and the Powell press conference. The Fed, expectedly, went for status quo on rates and cited a decline in inflation. But, in the press conference the Fed chair commented that there was no strong case for a rate move in either direction – thus pouring cold water on any rate cut hopes in 2019. The Dollar strengthened after these remarks, with EUR falling to 1.12 (high of 1.1260) and USDJPY trading at 111.50. The FOMC seems to indicate that rates could stay at the current level a while longer, in spite of calls for a rate cut this year. The recent US GDP print shows a healthy economy and yesterday’s ADP payroll surge to 275k indicates continued strength in the labour market. Tomorrow’s non-farm payroll data would be watched for the confirmation of this strength.
INR is back to trading in a range, as the Brent crude fall helped it pullback from 70+ levels. While the neutral FOMC might lead to some medium-term reset of rate expectations and flow dynamics, the immediate impact of FOMC is fairly marginal.
3rd May 2019
INR likely to open around 69.40
INR is supported well, as oil prices continue to fall. With the Fed out of the way, markets would await the non-farm payroll release today to gauge the strength of the US labour market. The recent data seem to indicate some stability in the US economy and is sustaining Dollar strength. EUR is now trading at 1.1175 and USDJPY at 111.45.
There is no real trigger for a large move in INR till the elections, and the currency could drift along with oil price movements. With Brent now at 70.63, one can expect a bit more support for the Rupee in the short term. Given that the election is a large market-mover, ideal hedging could be with options – to pay a premium for ensuring a hedge rate and at the same time, participate in the post-election move.