Rupee Ends Higher at 65.96 on Dollar Selling
In line with equity market, the rupee on Tuesday ended nine paise higher at 65.96 against dollar on persistent selling of the US currency by banks and exporters amid sustained capital inflows.
Weakness of dollar in the overseas market also affected market sentiment.The rupee resumed sharply lower at 66.33 per dollar against Monday’s close of 66.05 at the interbank foreign exchange market and dropped further to 66.41 on initial month-end dollar demand from importers. However, it recovered afterwards to 65.92 due to rise in equity market before finishing at 65.96 per dollar, showing a gain of 0.09 paise or 0.14 per cent. .
Euro sags as euro zone inflation turns negative in Sept
The euro lost ground on Wednesday as data showing euro zone inflation dipped back into negative territory in September fuelled expectations the European Central Bank will expand or extend its asset purchase programme.
The euro fell 0.4 percent to $1.1205, and was down 0.7 percent against the British pound, although it remained on track for a quarterly gain against the dollar.
“A weak number was expected and bolsters expectations that the ECB may have to expand its asset purchase programme from the 60-billion-euros-a-month to something larger, perhaps by year-end,” said Richard Falkenhall, currency strategist at SEB.
“That is negative for the euro, but a lot depends on how stock markets behave. If stocks drop, then the euro is likely to be supported as they are going in opposite ways.”.
Pound falls to 2-week lows vs. stronger dollar
The pound fell to two-week lows against the U.S. dollar on Tuesday, as expectations for a U.S. rate hike in the coming months continued to lend broad support to the greenback.
GBP/USD hit 1.5385 during European morning trade, the pair’s lowest since May 8; the pair subsequently consolidated at 1.5415, sliding 0.36%. Cable was likely to find support at 1.5241, the low of May 8 and resistance at 1.5591, the high of May 20. The dollar was boosted after Federal Reserve Chair Janet Yellen reiterated Friday that the bank still expects to start raising interest rates later in the year if the economy continues to improve as expected.
| Important events and their explanation: |
| Time ( IST) | Currency | Economic Data | Actual | Expectation | Previous |
| 12:30am | USD | Fed Chair Yellen Speaks | |||
| 5:30am | USD | FOMC Member Brainard Speaks | |||
| 12:45pm | EUR | Spanish Manufacturing PMI | 53 | 53.2 | |
| 2:00pm | GBP | Manufacturing PMI | 51.3 | 51.5 | |
| 6:00pm | USD | Unemployment Claims | 273K | 267K | |
| 7:30pm | USD | ISM Manufacturing PMI | 50.8 | 51.1 |
Explanation:- Again a crucial day for the US dollar. Out of the above data’s Unemployment and FED yellen would turn out to be a crucial event. Last week fed indicated a rate hike in the month of December 2015. We assume above data might also turn out to be positive for the USD and negative for the INR.
| Quick Glance : |
| Instrument | Price | %Chg | Volume | OI |
| USD/INR | 65.86 | 0.17 | 788526 | 960103 |
| EUR/INR | 73.50 | -0.82 | 37048 | 48836 |
| GBP/INR | 99.98 | 0.07 | 21059 | 41217 |
| JPY/INR | 54.50 | -0.64 | 7908 | 15311 |
| Technical touch : |
USDINR
As seen USDINR pair is trading near its crucial support of 65.80 levels and forming a bullish flag in a daily chart. Well before conforming a flag, we would say its travelling in a fixed side ways trendline. Hence for the coming trading days we assume a tight range between 65.40-66.4 levels.