Monday’s trade saw USD/PKR within the range 154.70-155.00. The Pakistan’s Rupee closed flat at 154.70 and was set for a 10.78% annual loss against the greenback. PKR has managed to advance about 6.5% since its 2019 low of 164.83, registered on July 1st.
Optimism over US-China trade relations continued to support investor risk appetite before year-end, while pressuring USD demand. After an annual work conference, the Chinese Commerce Ministry said over the weekend that it had “proactively dealt with” trade frictions with the US throughout 2019. The ministry noted it had implemented the decisions of the central government and “resolutely safeguarded the interests of the country and the people”.
Both the US and China are currently conducting the required procedures prior to signing their “Phase One” trade agreement.
Meanwhile, PKR may draw support from incoming tax cuts on some of Pakistan’s main exports, as it would be a crucial step to reducing the country’s trade deficit, improving trade ties with its Gulf partners and bolstering economic growth.
Abdul Razak Dawood, Pakistan Prime Minister’s adviser for commerce and investment, indicated the tax breaks would last 3-4 years and affect engineering, chemicals, technology, footwear among up to 20 sectors. Pakistani exports are projected to increase to $24.5 billion-$25 billion during the current fiscal year ended June from $23 billion in the preceding year.
The US Dollar Index was retreating for a fifth straight day on Tuesday, down 0.05% to 96.69 in late Asian trade.
Today’s focus will be on US data string. At 14:00 GMT Standard & Poor’s/Case-Schiller will report on the performance of their House Price Index, which measures the change in values of single-family homes in 20 metropolitan areas across the US. According to market consensus estimate, home prices in the 20 areas probably rose 2.2% in October compared to October 2018. In September, home prices rose 2.1% year-on-year. A higher-than-expected annual increase in home values would support USD, as it would suggest housing market strength.
Meanwhile, confidence among US consumers probably improved in December, with the corresponding index coming in at 127.9, according to expectations. In November, the gauge was reported at 125.5, or the lowest reading since June. In case the index rebounded at a sharper-than-expected rate in December, this would have a strong bullish effect on USD, since higher confidence would suggest a greater willingness to spend and better contribution to economic growth. The Conference Board research group will release the official data at 15:00 GMT.
USD/PKR was edging up 0.10% to 154.86 in late Asian session on Tuesday.
