Rupee opened lower, Dollar firmed vs. major currencies

Friday,   14-Dec-2018   09:07 AM (IST)

The Indian rupee opened the day lower at 71.7850/7950 levels compared to its previous close at 71.68/69 levels amid weakness in regional currencies and equities on renewed global growth concerns. China November retail sales and industrial output numbers, released earlier today, fall short of expectations. Bank of America Merrill Lynch says recent weakness in Chinese data means regional risk premium will remain high. Benchmark indices opened flat but immediately lost ground to trade lower on the back of profit booking. The Nifty rallied nearly 500 points in previous three consecutive sessions. The Sensex was down 107.07 points at 35,822.57 and the Nifty slipped 33.20 points to 10,758.30. Indian government bonds fall in early trade on profit booking and as crude oil prices gain; investors await developments from RBI's central board meeting today, first under governor Shaktikanta Das. As per the technical indicators range for the USDINR pair may be 71.45-71.95 levels. Rupee has an immediate support at 71.86 levels. A breach of the same may see rupee at 71.96 followed by 72.14 levels. On the positive side rupee is likely to face resistance at 71.58 levels and if it is able to break the same then it may gain up to 71.44 levels followed by 71.28 levels.

The dollar firmed against most major counterparts on Friday as investor focus shifted to an expected U.S. interest rate hike next week, although gains are likely to be capped on greater uncertainty about next year's policy outlook. The greenback found broad support as the euro and pound came under pressure, after downbeat comments from the European Central Bank president about the outlook for the euro zone and renewed concerns about a hard Brexit. Market participants are now turning their attention away from immediate global trade issues to the Federal Reserve's Dec. 18-19 meeting. The Fed is widely expected to raise interest rates by 25 basis points, its fourth rate hike this year though greater focus will center on the policy outlook for 2019, over which there is more uncertainty. McCarthy said markets will be watching for any revisions in the Fed's growth and inflation outlook. He sees more upside to the dollar versus the euro and yen if its forward guidance paints a stronger picture for the U.S. economy. The yen was slightly stronger at 113.57 to the U.S. currency. The dollar has gained 1.2 percent versus the Japanese currency in the past six trading sessions as interest rate differentials between U.S. and Japan make the greenback a more attractive bet than the yen. The dollar has been the biggest winner of 2018, having gained 5.3 percent over its peers so far this year. The Fed is the only major central bank to raise rates on the back of a robust economy, accelerating inflation and steady corporate profits. The euro traded flat on Friday, having struggled to stay in positive territory in the previous session. The ECB formally ended its 2.6 trillion euro crisis-fighting bond purchase scheme on Thursday. However, monetary policy is most likely to remain accommodative as ECB president Mario Draghi warned that the euro area's growth outlook is likely to remain weak amid threats of a global trade war and the prospect of a hard Brexit. Sterling was marginally lower at $1.2639 in early Asian trade after British Prime Minister Theresa May appealed to fellow EU leaders for concessions to help her win support in parliament next month for a deal that can smooth Britain's exit from the European Union. The pound had posted two consecutive sessions of gains versus the greenback after Prime Minister May fought off a bid to unseat her by colleagues unhappy with her Brexit plans.