Rupee trading lower, Pound off lows vs. Dollar

Thursday,   16-Aug-2018   12:26 PM (IST)

The Indian rupee is trading lower at 70.25/26 levels (12:20 pm) in the afternoon deals. In early deals rupee dropped to hit the all time low of 70.3175/3275 levels after data showed a wider-than-expected trade deficit. Weak cues from other emerging market currencies also weighed on the rupee. However, suspected intervention by the central bank helped the currency erase some losses, noting that many foreign banks and exporters are also selling dollars. Data released late Tuesday showed India’s trade deficit widened to $18.02 billion in July, up from $16.6 billion in previous month. So far rupee traded in the range of 70.1350-70.3175 levels. The benchmark indices trim losses to turn flat. At 12:19 PM, the S&P BSE Sensex was trading at 37,812, down 40 points while the broader Nifty50 was ruling at 11,427, down 8 points. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 69.70-70.40 levels. Rupee has an immediate support at 70.33 levels. A breach of the same may see rupee falling to 70.41 followed by 70.51 and 70.61 levels. On the positive side, rupee is likely to face resistance at 70.14 levels and if it is able to break the same then it may gain up to 70.05 levels followed by 69.96 and 69.88 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 4.26%, 4.22% and 4.19% respectively.

Sterling is trading up at 1.2723 level after falling as low as 1.2666, the lowest since June 22 on Wednesday, ahead of the UK retail sales report. The UK retail sales are expected to increase 0.2% over the month in July after slumping unexpectedly in June. Core retail sales stripping the basket off motor fuel sales are expected to increase 0.1% m/m. Sterling is trapped in a strong downtrend and after breaking January 2017 highs and August 2017 low at 1.2776/1.2706, the June 2017 low at 1.2590 becomes next target. Some minor stabilization is to be expected on Thursday.  The Euro is trading at 1.1377 levels after the US Dollar pulled back across the board. The news of China and the US resuming trade talks and getting back to negotiations in late August helped Euro to recover from 14-month lows at around 1.1300 reached on Wednesday.