October 20, 2023
New Delhi, India
USDINR
USDINR closed at 83.24, marking a minor decrease of -0.05% from the previous close in the last session. The Rupee’s performance was characterized by a quest for triggers to break out of its narrow trading range. Notably, US retail sales data provided some optimism, reflecting a 0.7% rise in September compared to an upwardly revised 0.8% increase in August. However, concerns loom as fiscal deficits are expected to widen in FY24, with capex projected to increase by 29% for 13 Indian states.
Furthermore, Federal Reserve Chair Jerome Powell highlighted the strength of the U.S. economy and its tight labor markets in yesterday’s event. Powell’s remarks indicated that the Fed might consider further interest rate increases if the economy continues to exhibit above-trend growth and labor market tightness doesn’t ease. These comments contrast market expectations that the Fed had reached the end of its rate hikes. Powell emphasized that the Fed is proceeding carefully in evaluating the need for additional rate increases, maintaining current expectations that the benchmark policy rate will remain steady at the upcoming meeting.
GBPINR
In the last session, British Pound (GBP) faced downward pressure, closing at 100.92 with a decrease of -0.56% from the previous close. This drop followed UK data revealing that inflation remained high in September, maintaining its rate at 6.7%. While average weekly earnings in the UK rose by 8.1% YoY to GBP 661 per week, there was a slight deceleration in overall pay growth, settling at 7.8%. Bank of England Governor Andrew Bailey expressed puzzlement regarding the continued strength of pay growth in the UK. These economic conditions are compounded by ongoing geopolitical concerns in the Middle East, impacting GBP performance.
Furthermore, Federal Reserve Chair Jerome Powell highlighted the strength of the U.S. economy and its tight labor markets in yesterday’s event. Powell’s remarks indicated that the Fed might consider further interest rate increases if the economy continues to exhibit above-trend growth and labor market tightness doesn’t ease. These comments contrast market expectations that the Fed had reached the end of its rate hikes. Powell emphasized that the Fed is proceeding carefully in evaluating the need for additional rate increases, maintaining current expectations that the benchmark policy rate will remain steady at the upcoming meeting.
EURINR
EURINR concluded the session at 87.89, in the previous session, experiencing a minor decrease of -0.09%. The Euro’s performance was marked by its confinement within a narrow trading range, with investors closely monitoring developments in the Middle East. Notably, the ZEW Indicator of Economic Sentiment for Germany surged by 10.3 points in October, reaching -1.1. Concurrently, the ZEW Indicator of Economic Sentiment for the Euro Area rebounded to 2.3 in the same month from -8.9 in the previous month. European Central Bank (ECB) President Christine Lagarde noted that Eurozone labor market conditions remained strong, and wage growth was historically high. The Harmonized Index of Consumer Prices (HICP) in the Eurozone was reported at 0.3% in September. Furthermore, the Eurozone Current Account for August is expected to be released soon.
JPYINR
In the JPYINR trading pair, the Japanese Yen faced significant pressure, closing at 55.69 with a slight decrease of -0.14% from the previous close. This downward trend was primarily driven by robust economic data from the United States, reinforcing expectations of higher interest rates. Notably, industrial production in Japan declined by 0.7% MoM in August 2023. Additionally, the value of loans in Japan increased by 2.9% YoY in September. As a result, traders remain watchful for any signs of intervention by Japanese authorities, given the impact of external factors on the Yen’s performance.
