Today we saw exporter interest to cover Feb/March exposure, which has been a key reason why Indian rupee managed to gain, in spite of weakness in the European majors against the US dollar.
Sporadic custodian inflows were also noted. Economic docket was full of European stats. Eurozone retail sales rose quite strongly in November and also its unemployment rate held steady at 12.1%.
However, the disparity in employment situation between core and peripheral countries is startling.
At a time when countries like Austria and Germany are experiencing low unemployment, countries like Greece and others, are witnessing a unemployment rate close to 20-27%, with youth unemployment staying alarmingly high.
Economic data from Germany was upbeat with German factory orders rising by 2.1% in November and Trade surplus expanding to nearly a record level in November.
Overnight US pvt. sector employment survey from ADP and Last FOMC meeting minutes will be watched.
As a result, tomorrow we can expect the Indian rupee and US dollar range of 61:90 to 62:30 on spot.
By Anindya Banerjee, currency analyst, Kotak Securities
NOTE: The views expressed are those of the author