Currency Weekly Index - Key points Currency performance and outlook for the week Major macro-economic data for the week - Sharekhan
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Currency Weekly
January 18, 2021
Index
Key points
Currency performance and outlook for the week
Major macro-economic data for the week
Visit us at www.sharekhan.com
For Private Circulation onlyRupee advances on steady FII inflows and positive domestic markets
Highlights for the week ending January 16, 2021
• US Jolts job opening data showed there were • US Empire State Manufacturing Index fell to 3.5 in
about 6.5 million available jobs at the end of January 2021 from 4.9 in December 2020
November, down slightly from 6.6 million in • US industrial production increased by 1.6%
October in December 2020 compared to 0.5% rise in
• India CPI data showed inflation eased to 4.59% in November 2020
December 2020 from 6.93% in November 2020 • US Prelim UoM Consumer Sentiment Index fell
• India IIP data showed activity in the sector to 79.2 in January 2021 from 80.7 in December
contracted by 1.9% in November 2020 compared 2020
to 2.1% rise in November 2019
Equity markets
• Euro Area Industrial Production increased by
INDICES 15/01/2021 08/01/2021 % CHANGE
2.5% in November 2020 compared to 2.3% in
October 2020 DJIA 30814.26 31097.97 -0.91
DAX 13787.73 14049.53 -1.86
• US CPI data showed inflation accelerated by
FTSE 6735.71 6873.26 -2.00
0.4% in December 2020 compared to 0.2% in
HANGSN 28573.86 27878.22 2.50
November 2020
NIKKIE 28519.18 28139.03 1.35
• Japan core machinery orders increased by 1.5% NIFTY 14433.70 14347.25 0.60
in November 2020 compared to 17.1% in October Source: Telequote
2020
Forex
• US import prices increased by 0.9% in December
CURRENCY 15/01/2021 08/01/2021 % CHANGE
2020 compared to 0.2% in November 2020
DOLLAR INDEX 90.77 90.06 0.79
• US unemployment claims data showed the USDINR 73.05 73.24 -0.26
number of people filling for jobless claims EURUSD 1.2074 1.2221 -1.20
increased by 1,81,000 to 9,65,000 for the week EURINR 88.66 89.70 -1.15
ending January 9, 2021 GBPUSD 1.3579 1.3559 0.15
• UK GDP data showed the economy contracted GBPINR 99.73 99.56 0.17
by 2.6% in November 2020 compared to 0.6% USDJPY 103.9 103.9 -0.07
rise in October 2020 JPYINR 70.48 70.51 -0.05
• UK industrial production declined by 0.1% in Source: Telequote, Trade Tiger
November 2020 compared to 1.1% rise in October
Currency Performance for the week
2020
1.00% 0.79%
• UK manufacturing production increased by 0.7%
0.60%
in November 2020 compared to 1.6% in October 0.15% 0.17%
0.20%
2020
-0.20% -0.07% -0.05%
• US retail sales declined by 0.7% in December -0.26%
-0.60%
2020 compared to -1.4% in October 2020
-1.00%
• US core retail sales contracted by 1.4% in
-1.40% -1.20% -1.15%
December 2020 compared to -1.3% recorded in
Dollar USDINR EURUSD EURINR GBPUSD GBPINR USDJPY JPYINR
November 2020 Index
January 18, 2021 2Sharekhan Currency Weekly
Currency Performance and Outlook for range of 2% to 6%. However, sharp gains were
the Week capped on surge in crude oil prices and worries over
rising coronavirus cases across the globe along with
U.S. DOLLAR INDEX (DX): US Dollar increased by tightened COVID-19 restrictions to curb the outbreak.
0.79% in the previous week against a basket of six Additionally, India’s trade deficit widened by 23.66%
major currencies amid rise in bond yields, worries over to $15.44 billion in December 2020 compared to
political turmoil in the US, and rising corona virus cases $12.49 in December 2019. Indian Rupee touched a
across the globe. Yields rose on expectation of more high of 72.92 and closed at 73.04 against Dollar.
fiscal stimulus from Democrat-controlled government
Outlook: Indian Rupee is expected to trade with a
and return of long-muted inflation. President Elect,
negative bias amid strong Dollar and surge in crude oil
Joe Biden unveiled his long-awaited stimulus plan.
prices. Further, Rupee may slip on worries over rising
He called for $1.9 trillion COVID-relief plan. Further,
coronavirus cases across the globe and emergence
Democratic-controlled House of Representatives
of new variant of COVID-19. However, sharp fall may
along with 10 republicans voted on impeachment
be prevented on steady FII inflows and hopes of
against US President Donald Trump. The House voted
economic recovery from the pandemic. India’s Inflation
to impeach President Donald Trump for the second
remained in the RBI’s target range of 2% to 6%. The
time. He became the first president in history to be
decline in inflation may provide room for the central
impeached twice by the house. However, sharp upside
bank to slash interest rate to support the economy.
was capped as US Federal Reserve Beige Book Survey
USDINR spot expected trading range for this week is
showed most Federal Reserve Districts reported that
72.80– 73.80.
economic activity has increased modestly since the
previous Beige Book period. Furthermore, US Federal EURO: Euro depreciated by 1.20% in the previous
Reserve officials pushed back speculation that central week on strong Dollar, worries over rising COVID-19
bank will begin to taper its asset purchase programme cases and extension of lockdowns in many European
soon. US Federal Reserve Chair, Jerome Powell said countries to curb the outbreak. Further, European
US central bank is not raising interest rates anytime Central Bank (ECB) policymaker signaled that the
soon and rejected suggestions that the Fed might start central bank is keeping a close watch on exchange
reducing its bond purchases in the near term. Dollar rate developments and their negative impact on
index touched a high of 90.80 and closed at 90.772 inflation. Additionally, German economy shrank by
against Dollar. 5% in the pandemic year 2020. Euro touched a low of
1.2073 and closed at 1.2074 against Dollar.
Outlook: US Dollar is expected to trade with a positive
bias as demand for a safe haven may increase on Outlook: Euro is expected to trade with a negative bias
worries over rising coronavirus cases across the globe, on strong Dollar, concern over political uncertainty in
emergence of new strain of COVID-19, and worries Italy, and expectation of disappointing economic data
over political turmoil in the US. Further, surge in bond from Euro Area. Euro Area Manufacturing PMI data is
yields may support Dollar. Yields are rising on hopes forecast to show that activity in the sector has slowed
of economic recovery from the pandemic and return down and services PMI data is likely to show that
of long-muted inflation. President Elect, Joe Biden activity in the sector contracted for five consecutive
unveiled his long-awaited stimulus plan. He called months. Further, Euro may slip on worries over rising
for $1.9 trillion COVID-relief plan. Furthermore, US corona virus cases across the globe and emergence
President Elect, Joe Biden and his administration are of new strain of COVID-19. Furthermore, traders
due to be inaugurated in a heavily guarded ceremony fear over slowdown in economic recovery as many
on Wednesday. Traders will remain cautious ahead of European countries tightened COVID-19 restrictions
major economic data from the US. to curb the outbreak. Additionally, traders will keep
an eye on ECB’s monetary policy meeting. ECB is
USDINR: Indian Rupee appreciated by 0.26% in the
forecast to maintain its status quo, but more focus will
previous week amid rise in risk appetite in domestic
be on statements from the central bank to get a hint
markets and continued FII inflows. Further, India CPI
on future monetary stance. EURINR spot expected
data showed inflation eased to 4.59% in December
trading range for this week is 87.40 – 89.50.
2020 from 6.93% in November 2020. India’s Inflation
remained in the Reserve Bank of India’s (RBI) target
January 18, 2021 3Sharekhan Currency Weekly
GBP: Pound appreciated by 0.15% in the previous for this week is 98.40 – 100.10.
week as expectation of negative rates faded after
Governor Andrew Bailey said there were lot of issues JPY: Japanese Yen appreciated by 0.07% in the
previous week as demand for a safe haven improved
with negative rates. Additionally, investors expect
on worries over political turmoil in the US and Italy and
mass vaccination programme to speed up as UK Prime
rising corona virus cases across the globe. Further, Yen
Minister, Boris Johnson, said the government will be
gained strength on news that Japan will expand the
rolling out 24/7 vaccination centres. Furthermore,
area under state of emergency to seven more areas and
some High Street pharmacies in England will start
ban all foreign nationals from entering the country. Yen
vaccinating people from priority groups. However,
touched a high of 103.48 and closed at 103.87 against
sharp upside was capped on strong Dollar and
Dollar.
disappointing economic data from the UK. Pound
touched a high of 1.3711 and closed at 1.3579 against Outlook: Japanese Yen is expected to trade with a
Dollar. positive bias as demand for a safe haven may increase
on worries over political turmoil in the US and Italy, rising
Outlook: Pound is expected to trade with a negative
corona virus cases across the globe, emergence of new
bias on strong Dollar, worries over rising coronavirus
variants of COVID-19, and extension of lockdowns in
cases across the globe, and emergence of new
many countries to curb the outbreak. Further, Yen may
variants of COVID-19. Further, Pound may slip on
gain strength on news that Japan will expand the area
fears over slowdown in economic recovery due to
under state of emergency to seven more areas and
nationwide lockdown. Strict restrictions on social and
ban all foreign nationals from entering the country. A
business activities would hamper economic recovery.
state of emergency was previously declared in Tokyo
Additionally, expectation of disappointing economic
and three neighboring areas. However, sharp gains
data from the UK will hurt Pound. UK Manufacturing
may be prevented on optimism on hopes of global
PMI data is forecast to show that activity in the sector
economic recovery from the pandemic amid rollout
slowed down and services PMI data is likely to
of the vaccine and extraordinary fiscal and monetary
show that activity in the sector contracted for three
stimulus. Traders will remain cautious ahead of Bank
consecutive months. Traders will remain cautious
of Japan’s monetary policy meeting. JPYINR spot
ahead of Andrew Bailey’s, Governor, Bank of England
expected trading range for this week is 70.0–71.25.
(BOE), speech. GBPINR spot expected trading range
Major macro-economic data this week
Date Region Event Survey Prior Impact
19/01/2021 Eurozone ZEW Economic Sentiment 54.1 54.4 Medium
19/01/2021 Germany German ZEW Economic Sentiment 55.1 55 Medium
20/01/2021 UK CPI y/y 0.50% 0.30% Medium
20/01/2021 UK BOE Gov Bailey Speaks - - High
20/01/2021 US President-Elect Biden Speaks - - High
21/01/2021 Japan BOJ Outlook Report - - High
21/01/2021 Japan Monetary Policy Statement - - High
21/01/2021 Japan BOJ Policy Rate -0.10% -0.10% Medium
21/01/2021 Japan BOJ Press Conference - - Medium
21/01/2021 Eurozone Monetary Policy Statement - - High
21/01/2021 Eurozone Main Refinancing Rate 0.00% 0.00% Medium
21/01/2021 Eurozone ECB Press Conference - - High
21/01/2021 US Philly Fed Manufacturing Index 12.2 11.1 Medium
21/01/2021 US Unemployment Claims 832K 965K Medium
21/01/2021 US Housing Starts 1.56M 1.55M Medium
January 18, 2021 4Sharekhan Currency Weekly
Date Region Event Survey Prior Impact
21/01/2021 Eurozone Consumer Confidence -15 -14 Medium
22/01/2021 UK GfK Consumer Confidence -30 -26 Medium
22/01/2021 Japan Flash Manufacturing PMI 50.1 50 Medium
22/01/2021 UK Retail Sales m/m 0.80% -3.80% Medium
22/01/2021 France Flash Services PMI 49.1 49.1 High
22/01/2021 France Flash Manufacturing PMI 50.3 51.1 High
22/01/2021 Germany Flash Services PMI 45.1 47 High
22/01/2021 Germany Flash Manufacturing PMI 57.3 58.3 High
22/01/2021 Eurozone Flash Manufacturing PMI 54.6 55.2 Medium
22/01/2021 Eurozone Flash Services PMI 45 46.4 Medium
22/01/2021 UK Flash Manufacturing PMI 53.1 57.5 Medium
22/01/2021 UK Flash Services PMI 45.5 49.4 Medium
22/01/2021 US Flash Manufacturing PMI 56.6 57.1 Medium
22/01/2021 US Flash Services PMI 53.7 54.8 Medium
22/01/2021 US Existing Home Sales 6.55M 6.69M Medium
22/01/2021 US Crude Oil Inventories - -3.2M Medium
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