USD/INR ends up on uncertainty around US-China trade talks, weak risk appetite

7 October 2019 / Evening Brief

Indian Rupee

• Dollar/rupee ended up Monday as risk sentiments weakened on uncertainty over US-China trade talks. Slow down in German economy and weak Chinese yuan supported safe haven currency. Also, caution before US-China trade talks supported spot pair. Chinese yuan fell after Chinese officials indicated that they are hesitant to agree to a broad trade deal with US and have signalled the topics they are willing to discuss. The offer by Chinese officials won't include commitments on reforming Chinese industrial policy or the government subsidies that have been the target of longstanding.
• Dollar/rupee ended lower Thursday on overseas inflows into local stocks amid improved risk sentiments on possible trade deal between US-China and easing crude oil prices. The rupee gained on FPI inflows amid improved investor sentiments. Media reports showed Saudi Arabia restored production capacity to 11.3 million barrels per day, a faster than expected recovery after the Sept 14 attacks that halved more than half the kingdom's output.

Global Currency

• The dollar firmed on Monday, breaking a four-day losing streak, as fresh concerns over the trade war between the United States and China kept risk appetite subdued and trade-oriented currencies such as the Australian dollar under pressure. A Bloomberg report that Chinese officials were reluctant to agree to U.S. President Donald Trump's broad trade deal cast a pall over investors, after weak U.S. economic data last week raised concerns about the economic outlook.
• Sterling slipped 0.2% to around $1.23 GBP=D3 , with only a few weeks until the UK's scheduled exit from the European Union on Oct. 31.

Global Markets

• Oil prices were up on Monday, buoyed by hopes of progress in U.S.-China trade talks and supported by challenges to supply facing major exporters.
• Gold eased on Monday as the dollar firmed after a report said China was likely reluctant to agree to a broad trade deal with Washington, but bullion held a tight range as investors took a wait-and-see approach ahead of U.S.-China talks this week.

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