News Worms
News Worms


Rupee settles 11 paise higher against United States dollar at 64.43

Rupee settles 11 paise higher against United States dollar at 64.43

June 16 (BusinessDesk) - The New Zealand dollar declined against the pound after the Bank of England policy committee kept rates on hold but with a split vote, while it fell against the USA dollar in the wake of yesterday Federal Reserve statement that kept intact plans for another rate hike this year.

Wednesday saw EUR/USD jump to a high of 1.1288, which was the pair's best level since August 2016. The 30-share BSE Sensex opened 84.74 points, or 0.27 per cent, up at 31,160.47, while NSE Nifty opened 17.40 points, or 0.18 per cent, up at 9,595.45.

The euro is down by 0.5% at 1.1160 against the dollar.

The euro traded at $1.1220, after having hit a seven-month high of $1.1296.

Wednesday's Eurozone industrial production and employment change results did beat expectations, but German economic sentiment has dropped according to a ZEW survey and French inflation was worse in May than projected.

However, the slippage in longer-dated yields may imply that investors aren't as unfazed by a batch of data, including a recent tepid reading of consumer prices (http://www.marketwatch.com/story/inflation-falls-again-in-may-as-cpi-recedes-from-recent-high-water-mark-2017-06-14) and the Friday's housing data, that have signaled that inflation and perhaps the economy, may not perform as optimally as the central bank hopes.

The Eurozone's April trade balance data also disappointed on Thursday.

"I would think that at some point the market is going to be pricing in even greater risks that the Fed might be moving too quickly", said Mark Cabana, head of USA short rates strategy at Bank of America Merrill Lynch in NY. When Wednesday's US inflation data from May was published, the US Dollar briefly plunged.

The core rate of inflation increased at 1.7 percent on the year, the fourth consecutive month of deceleration and the slowest overall pace in two years. While gross domestic product grew a lower-than-expected 0.5 percent in the first quarter, manufacturing production rose 1 percent and was 2.1 percent higher than a year earlier, with transport equipment, machinery and equipment manufacturing the biggest contributor to the sector.

The Federal Reserve's monetary policy meeting yielded few surprises for the markets.

Gold turned negative after the Fed rate increase.

If inflation comes in lower than projections, the Euro Australian Dollar exchange rate is likely to continue falling towards the end of the week. Month-on-month inflation was projected to remain at 0.1% but instead dropped to 0%. Needless to say, markets widely expect US interest rates to be hiked and this has been largely priced into the US Dollar already. Bets of another 2017 rate hike are now around just 35%.

The Australian Bureau of Statistics earlier reported that the number of employed people rose by 42,000 in May, beating expectations for a 10,000 gain.

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