The World Today
The American dollar remained under selling pressure, losing ground against most major rivals. The EUR/USD pair flirted with 1.1000, holding just below it ahead of the Asian opening. There were no significant macroeconomic releases, neither coronavirus-related news that could trigger some action.
The greenback’s decline was related to the positive performance of global indexes. Stocks advanced, helped by encouraging earnings reports.
The US Federal Reserve released the Minutes of its latest meeting. Policymakers discussed a more explicit forward guidance and agreed that rates will stay low for longer. There was no discussion on negative rates.The Pound was among the weakest, with GBP/USD settling around 1.2220. Inflation in the UK fell to its lowest in more than three years in April, triggering speculation that the BoE could deepen its stimulus measures, including pushing interest rates into negative territory. Also, BOE’s Governor Bailey said that he had changed his position on negative rates “a bit.” US Treasury yields edged lower, weighed by the demand for 20-year Treasuries. The USD/JPY trimmed its recent gains and returned to 107.30 region.
Commodity-linked currencies retain their positive tone, helped by equities and crude oil prices, which also advanced. Gold spent the day in consolidative mode around $1,750.00 a troy ounce.
Back home, expectations of foreign fund inflows may support the Indian currency. Some movement in the economy has started.Both Delhi and Maharashtra have given relaxation on lockdown and from May 25, domestic flight are also starting, these factors may support the rupee. However, trade volumes in the currency market are expected to remain subdued, given that staff strength at banks' treasury desks is minimal. Further, market players may refrain from placing aggressive bets amid the lack of significant cues. Underlying concerns over the rising cases of coronavirus in India and its impact on the economy may lead market players to refrain from placing aggressive bets. Premiums on dollar/rupee forward contracts may edge higher as some importers may purchase the greenback for forward delivery on the view that rupee may remain under pressure in the coming days.