Economic news was mixed. Japan's trade deficit in December plunged to record. German economic confidence indicator from IFO institute jumped much more than expected in January. In Japan, Ministry of Finance data on Monday showed exports rose 9.5 percent in 2013, the first gain in three years, but export volumes fell 1.5 percent, a third consecutive fall. Japan's annual trade gap was a record 11.47 trillion yen, much higher than previous years trade deficit of 6.94 trillion yen. It was the third straight annual trade deficit.
Over the near term, RBI and US Fed monetary policy, will be the key triggers. RBI is expected to mainta on status quo on rates. However, US Fed is expected to announce another USD 10 billion of reduction in its monthly liquidity injection program. With most of the market participants expecting a taper from US Fed, surprise can only be positive for risk, in case US Fed does not taper or taper's less than expected. A range of 62:00/62:50 and 63:50/64:00 on spot can be seen over near term.
By Anindya Banerjee, currency analyst, Kotak Securities
NOTE: The views expressed are those of the author