Rupee opened flat, Dollar under pressure vs. major currencies
Thursday,
10-Jan-2019
09:02 AM (IST)
The Indian rupee opened the day flat at 70.46/47 levels compared to its previous close at 70.46/47 levels but moves up to 70.3350/3450 levels in early deals tracking broad decline in dollar after dovish Fed minutes, overshadowing concerns over oil prices. Benchmark indices opened largely flat with some negative bias taking cues from their Asian peers. Indian government bonds little changed in early trade ahead of central banks up to INR100 billion note purchase. As per the technical indicators range for the USDINR pair may be 69.90-70.85 levels. Rupee has an immediate support at 70.62 levels. A breach of the same may see rupee at 70.75 followed by 70.99 levels. On the positive side rupee is likely to face resistance at 70.17 levels and if it is able to break the same then it may gain up to 70.00 levels followed by 69.81 levels.
The dollar was under pressure early on Thursday on growing expectations the Federal Reserve will pause its rate tightening cycle this year, while optimism about the Sino-U.S. trade talks reduced demand for safe-haven assets. Minutes from the Fed's Dec.18-19 meeting revealed that several policymakers were in favor of the US central bank keeping rates steady this year. Broader market sentiment was also bolstered in early Asian trade amid signs of progress in U.S.-China trade talks. Trade tensions between the world's two largest economies had rattled markets for most of last year. Commodity currencies such as the Canadian dollar have been the biggest beneficiaries of improving risk sentiment this week. The loonie fetched C$1.3206, hovering near its highest level in more than a month thanks to a sharp rebound in oil prices. Also supporting the loonie was the Bank of Canada's assessment that further rate hikes may be necessary. The dollar index was marginally lower at 95.14, after losing 0.7 percent on Wednesday. The index has weakened in four out of the last five sessions as traders wager that US interest rates will stay steady in 2019. The dollar had gained 4.3 percent in 2018 as the Fed hiked rates four times on the back of a strong domestic economy, falling unemployment and rising wage pressures. The euro and sterling each gained marginally on the dollar, fetching $1.1547 and $1.2794 respectively. However, traders expect the strength in both these currencies to fade in the coming weeks. Economic data in the euro zone has remained consistently weaker than estimates over the last few months, especially in France and Germany, the euro zone’s economic powerhouses. The European Central Bank is widely expected to remain accommodative in 2019, which should keep a lid on the single currency. Brexit woes are most likely to dominate sentiment towards sterling. Britain's Prime Minister Theresa May must win a vote in parliament to get her Brexit deal approved or risk seeing Britain's exit from the European Union descend into chaos. The vote is now due to take place the week beginning Jan. 14.
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