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Rupee opened flat, Dollar weaker vs. major currencies

Friday,   11-Jan-2019   09:07 AM (IST)

The Indian rupee opened the day flat at 70.42/43 levels compared to its previous close at 70.4125/4225 levels after Jerome Powell reiterates Fed will be patient on monetary tightening amid low inflation. Asian currencies, except Chinese Yuan, are mostly flat. Yuan jumps 0.5% to 6.7560, highest in almost six months, amid trade optimism. Indian government bonds rise in thin early trade ahead of New Delhi's auction of INR40 billion of new 10-year paper. It is a flat start to the market on Friday morning, with the Nifty holding 10,800-mark. The Sensex is up 48.99 points at 36155.49, while the Nifty is higher by 9.10 points at 10830.70. As per the technical indicators range for the USDINR pair may be 70.00-70.75 levels. Rupee has an immediate support at 70.58 levels. A breach of the same may see rupee at 70.75 followed by 70.92 levels. On the positive side rupee is likely to face resistance at 70.25 levels and if it is able to break the same then it may gain up to 70.12 levels followed by 69.91 levels.

The dollar held a soft tone versus its peers on Friday, on rising expectations the U.S. Federal Reserve may hit the pause button on monetary tightening if the economy slows this year. Fed Chairman Jerome Powell reiterated on Thursday the U.S. central bank has the ability to be patient on monetary policy given that inflation remains stable. Markets are now pricing in no further rate hikes by the Fed this year. Fed Vice Chair Richard Clarida also struck a dovish tone, further cementing the central bank's willingness to remain patient on the issue of raising rates. Sentiment was cautious in early Asian trade on a lack of concrete details from the United States and China on any progress made in their trade dispute after a three-day meeting in Beijing. The two sides are more than halfway through a 90-day truce agreed by U.S. President Donald Trump and his Chinese counterpart Xi Jinping. The dollar index was marginally lower at 95.5 on Friday. The index has fallen around 2.2 percent since mid-December on expectations that a slowdown in growth, both in the United States as well as globally, will restrict the Fed from raising rates in 2019.In 2018, the greenback outperformed its peers, gaining 4.3 percent as the Fed hiked rates four times on the back of a strong domestic economy, falling unemployment and rising wage pressures. But now traders see limited upside in the greenback. The safe-haven yen strengthened 0.1 percent to 108.32 per dollar, reflecting investors' cautious wait-and-see mode. The euro gained 0.1 percent at $1.1502, after losing 0.4 percent of its value in the previous session. The single currency has been pressured by a slew of weaker-than-expected economic data, especially from France and Germany. The European Central Bank is widely expected to remain accommodative in 2019, which should keep a lid on the single currency. Elsewhere, sterling traded marginally firmer, fetching $1.2752 in early Asian trade with traders focused on the progress of Brexit.