Rupee up 2 paise against the US dolla
The rupee was trading at 60.46/47, slightly higher from its Wednesday’s close of 60.4850/4950. Gains in other Asian units versus the dollar was helping the pair slightly. The was pair seen in 60.35 to 60.65 range during the session. Losses in the domestic stock market, however, were likely to support the dollar. Traders were closely monitoring fund flows for near-term direction. The outcome of the ECB meeting later in the day and the US non-farm payrolls on Friday awaited.
The euro slipped against the dollar on Thursday, hovering near one-year lows hit earlier this week on expectations that the European Central Bank will flag the possibility of more monetary stimulus. Hopes of a peaceful resolution to the Russian-Ukraine conflict had shored up the common currency, only for Ukraine’s prime minister to dismiss the proposal outlined by President Vladimir Putin. The Swedish crown rose against the euro after the Riksbank kept interest rates unchanged as expected and did not push back the timing of its first rate hike as some in the market had anticipated. Overall, the focus was on the euro before the ECB rate decision at 1145 GMT and President Mario Draghi’s press conference 45 minutes later. The euro has already fallen a long way, dropping from a high of $1.3701 on July 1 to $1.3110 on Tuesday. It last fetched $1.3138, down 0.1 per cent. “The euro’s downtrend is intact,” said Niels Christensen, FX strategist at Nordea.
"But given a lot of the dovishness from the ECB has already been priced in there is a risk of a bounce if the ECB does not live up to expectations. Nevertheless, investors will look at upticks to initiate fresh short positions." Traders said some euro bears were just taking a breather due to uncertainty over whether the ECB will actually deliver a fresh round of policy stimulus or simply lay the groundwork to act at a later date. The euro could bounce to as high as around $1.3250 if the ECB holds off from any more easing, said Masafumi Yamamoto, market strategist for Praevidentia Strategy in Tokyo. "I don’t think there is a need to lower interest rates just yet," he said, adding that while inflation in the euro zone has been slowing, the ECB will probably wait to see how the TLTRO plays out. The first TLTRO operation, the ECB’s bank funding plan unveiled in June, is set for Sept. 18.
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