By Gaurang Somaiya
Rupee sharply rose against the US dollar as global crude oil prices were weighed down following worries of oversupply and as the dollar weakened against its major crosses after dovish statement by the Federal Reserve.
On the domestic front, trade number showed the deficit widened in November to $16.7 compared with $17.13 in the previous month. Primarily market participants were keeping an eye on the Federal Reserve policy statement, wherein the central bank decided to raise for the fourth time this year.
On the other hand, the Fed chairman hinted that in the coming year gradual rate hike is possible thereby keeping gains capped for the dollar. This week, volatility for the major currencies including the rupee could be confined to a narrow range as most investors are expected to be on the sidelines.
Euro in the past few weeks was consolidating in a wide range of 1.1250 and 14.1450 as most market participants were cautious following uncertainty related to Brexit. Economic numbers released from the Euro zone too werent impressive thereby keeping gains capped for the currency. Earlier last week, the ECB released its policy statement, wherein the central bank held rates unchanged and formally decided to end its $2.95 trillion bond purchase scheme.
On the economic calendar, from the Euro zone, no major data was released but broad weakness in the dollar kept the momentum positive for the currency. This week, we expect the EURUSD pair to quote in the range of 1.1270 and 1.1490.
Pound continues to trade with high volatility as most market participants remained cautious ahead of the important Bank of England policy statement that was released last week. In its policy statement, the central bank governor mentioned that Brexit uncertainty had “intensified considerably” over the last month. On growth, officials forecasted that the UK economy in the last three months of 2018 is expected to grow at 0.2% from 0.3% and said the picture in early 2019 was likely to be similar. The BoE repeated its view that interest rates could move in either direction after Brexit, depending on Britains ability to avoid a potentially damaging no-deal Brexit. This week, we expect GBPUSD to trade in the range of 1.2570 and 1.2790 with no major economic event lined up to give a clear direction to prices.
(Gaurang Somaiya is Currency Analyst at MOFSL)
Original Article
[contf]
[contfnew]
ET Markets
[contfnewc]
[contfnewc]
