Rupee opened flat, Euro lower vs. Dollar

Friday,   19-Oct-2018   09:06 AM (IST)

The Indian rupee opened the day flat at 73.60/61 levels compared to its previous close at 73.5950/6050 levels as Brent crude slipped back below $80, helping offset rise in dollar index and further decline in local equities. Chinese Yuan declined to lowest since January 2017 after US refrained from calling Beijing a currency manipulator, further pressuring regional risk appetite. Focus remains on weekly foreign exchange data and minutes of October MPC meeting, due after market close. Indian government bonds rise as Brent crude oil slips below $80 per barrel; bond gains capped before INR110 billion bond sale today. It’s a negative start to the market on Friday morning as weak global cues and a fall in index heavyweight, Reliance Industries, are dragging the indices lower. The Sensex has opened over 470 points lower, while the Nifty is down over a percent and is around 10,300. As per the technical indicators range for the USDINR pair may be 73.25-73.80 levels. Rupee has an immediate support at 73.68 levels. A breach of the same may see rupee at 73.85 followed by 74.04 levels. On the positive side rupee is likely to face resistance at 73.42 levels and if it is able to break the same then it may gain up to 73.26 levels followed by 73.10 levels.

The euro hovered near a one-week low against the dollar on Friday as the European Commission's criticism of Italy's populist budget sparked fresh concerns about political tensions in the common currency zone. The dollar index, a gauge of its value against major peers, was 0.05 percent higher at 95.96 on Friday, having closed on Thursday at its highest level since Aug. 21. The index's rise was due to the steep fall in the euro on Thursday, which constitutes around 57 percent of the index. The euro was relatively flat at $1.1454 on Friday, having fallen 0.4 percent on Thursday, its lowest level since Oct. 9 after the European Commission said Italy's 2019 budget draft is in serious breach of European Union budget rules. The Commission said in a letter to Italian Economy Minister Giovanni Tria,that planned government spending was too high, the structural deficit - excluding one-offs and business cycle effects - would rise instead, not fall, and that Italian public debt would not come down in line with EU rules. This has sparked investor concerns about more political tensions in the EU between Brussels and member states, which has hurt the euro. The gap between Italian and German 10-year bond yield spreads hit its widest level in 5-1/2 years after news of the Commission letter broke. Markets were not cheered by Italy's response as Italy's prime minister defended the nation's free spending budget on Thursday. The British pound hit a fresh 11-day low on Friday, but rebounded slightly to quote at $1.3020 versus the dollar. Traders placed bearish bets on the sterling as a EU-UK summit failed to yield a decision on Britain's exit from the euro zone. British Prime Minister Theresa May, on Thursday said that the European Union's proposal on the Irish border was unacceptable. The Japanese yen weakened slightly versus the dollar on Friday, to trade at 112.31.The greenback lost 0.4 percent of its value to the yen on Thursday, reflecting the global risk-off mood due to rising geopolitical tensions between the U.S. and Saudi Arabia, European political risks arising out of Italy and U.S-Sino trade war tensions.