Rupee opened flat, Dollar lower vs. major currencies

Monday,   19-Nov-2018   09:09 AM (IST)

The Indian rupee opened the day flat at 71.92/93 levels compared to its previous close at 71.92/93 levels amid ongoing rift with New Delhi and rumors of Governor Urjit Patel standing down, RBI’s board meeting to be closely watched. Rupee moved lower to 72.0775/0875 levels in early deals despite US yields closing at lowest in seven weeks and dollar index falling 0.5% on Friday following comments by Fed Vice Chair that US interest rates were close to neutral. Brent crude up 0.9% at $67.38, headed for fourth day of advance. Equity benchmarks have opened higher on Monday with Nifty is well above 10,700 mark while Sensex also gained more than 150 points. Indian government bonds fall in early trade due to uptick in crude oil prices and on caution ahead of Reserve Bank of India’s board meeting today.As per the technical indicators range for the USDINR pair may be 71.70-72.30 levels. Rupee has an immediate support at 72.15 levels. A breach of the same may see rupee at 72.26 followed by 72.38 levels. On the positive side rupee is likely to face resistance at 71.85 levels and if it is able to break the same then it may gain up to 71.73 levels followed by 71.62 levels.

The dollar was modestly lower against its key rivals on Monday after Federal Reserve officials expressed caution over the global growth outlook, prompting traders to reassess the pace of future U.S. interest rate increases. The U.S. currency has enjoyed a strong run this year thanks to the Fed’s steady policy tightening on the back of a robust economy and rising wage pressures. A fourth rate hike for this year is expected next month and policy makers had indicated two more by June 2019.But comments on Friday by Richard Clarida, the Fed’s newly appointed vice chair, put to the test market expectations for a steady pace of tightening. Clarida cautioned about a slowdown in global growth, saying “that’s something that is going to be relevant” for the outlook for the U.S. economy. Federal Reserve Bank of Dallas President Robert Kaplan, in a separate interview with Fox Business, also said he is seeing a growth slowdown in Europe and China. The comments led some traders to question whether the dollar’s rally was nearing its end, with the benchmark U.S. 10 year treasury yields pulling back slightly. The dollar index .DXY, a gauge of its value versus six major peers, traded marginally weaker at 96.45, adding to a decline of 0.5 percent on Friday. The dollar index had hit a 16-month high of 97.69 on Nov. 12.The yen  was fetching 112.70 on the dollar, up slightly on the day. The dollar lost 0.9 percent versus the yen last week as traders rushed into the safe-haven Japanese currency on concerns over U.S.-Sino trade tensions and political risks in Europe around Brexit and the Italian budget. The euro managed to hold steady in early Asian trade, changing hands at $1.1411, having advanced over the last four trading sessions despite poor economic fundamentals. The British pound wobbled at $1.2832, having come under heavy selling last week amid turmoil over British Prime Minister Theresa May's draft Brexit plan.