Rupee opened higher, Dollar lower vs. major currencies

Friday,   07-Dec-2018   09:08 AM (IST)

The Indian rupee opened the day higher at 70.55/56 levels compared to its previous close at 70.90/91 levels after Brent slips back below $60 amid signal that OPEC and allies may cut output less than expected. Brent down 0.6%, adding to yesterday 2.5% decline after Saudi Arabia energy minister backs production cut of one million barrel a day, at lower end of estimates. OPEC meeting with Russia for decision on output cut later today. After a yesterday's declines benchmark indices started on positive note on Friday with Sensex is up more than 150 points. Indian government bonds continue to rally in thin trading volume as crude oil prices stay lower ahead of crucial OPEC decision on oil production cut. As per the technical indicators range for the USDINR pair may be 70.25-70.75 levels. Rupee has an immediate support at 70.76 levels. A breach of the same may see rupee at 70.92 followed by 71.22 levels. On the positive side rupee is likely to face resistance at 70.42 levels and if it is able to break the same then it may gain up to 70.28 levels followed by 70.00 levels.

The dollar struggled to recover against its key rivals in Asian trade on Friday, hobbled by renewed speculation of an imminent pause in the Federal Reserve's tightening cycle, perhaps as soon as it delivers a widely expected rate hike later this month. Of particular concern for dollar bulls has been the recent sharp falls in U.S. treasury yields, with an inversion of the yield curve signaling a sharp economic slowdown or even a recession down the road. Investors are now watching Friday's U.S. non-farm payrolls release for November to gauge wage growth and labor market strength. Dollar investors were given more reason to be cautious after the Wall Street Journal reported Fed officials are considering whether to signal a new wait-and-see mentality after a likely rate increase at their meeting in December. The dollar index, which measures the greenback against a basket of six major peers, was basically flat at 96.804 in early trade. The index shed 0.3 percent during the previous session, closing at one-week low and down 0.9 percent from a 17-month peak hit on Nov. 12.The benchmark U.S. 10-year Treasury yield was last at 2.896 percent after dipping to its lowest level since late August overnight. The dollar has slipped after Fed Chairman Powell said last week that U.S. interest rates were nearing neutral levels, which markets interpreted as signaling a slowdown in rate hikes. The Fed is expected to raise interest rates again at its Dec. 18-19 meeting, which would be its fourth hike this year, but investors are already focusing on how much further it might raise rates and whether a pause is imminent. Interest rate futures implied traders see no more than one rate increase from the Fed in 2019, compared with previous expectations for possibly two rate hikes, according to CME Group's FedWatch program. On Friday, the dollar rose slightly against the euro as well as the Japanese yen, trading at $1.1373 and 112.70 yen per dollar, respectively. The single currency had gained 0.3 percent against the dollar during the previous session while the yen rose about a quarter of a percent. The Australian dollar was down 0.1 percent at $0.7230, near a three-week trough of 0.7192 hit on Thursday.