Rupee opened higher, Dollar edges lower vs. major currencies

Wednesday,   13-Feb-2019   09:06 AM (IST)

The Indian rupee opened the day higher at 70.48/49 levels compared to its previous close at 70.70/71 levels after US President Donald Trump says he is willing to extend China tariff deadline, boosting Asian currencies. Benchmark indices opened higher today following Asian stocks that rose to a more than four-month high, lifted by optimism that the US and China might be able to hammer out a deal to resolve their trade dispute. At 9:30 AM, the S&P BSE Sensex was trading at 36,279, up 126 points, while the broader Nifty50 was ruling at 10,865, up 34 points. Indian government bonds jump in early session, as January retail inflation easing to 19-month low increases bets of another rate cut in April. Retail inflation declined to 2.05 per cent in January over the previous month on continued decline in food prices. IIP grows at 2.4% in December. As per the technical indicators range for the USDINR pair may be 70.20-70.80 levels. Rupee has an immediate support at 70.65 levels. A breach of the same may see rupee at 70.85 followed by 71.10 levels. On the positive side rupee is likely to face resistance at 70.32 levels and if it is able to break the same then it may gain up to 70.12 levels followed by 69.90 levels.

The dollar edged lower versus its peers on Wednesday, as rising hopes of a breakthrough in U.S.-China trade talks led investors to put money into the euro and Asian currencies. The euro gained 0.1 percent to $1.1335, while the Aussie dollar, often considered a barometer for global risk appetite, rose 0.3 percent to $0.7112. The kiwi dollar was the biggest gainer in the Asian session, rallying a whopping 1.6 percent on the dollar to $0.6837 after the Reserve Bank of New Zealand sounded less dovish on policy than markets had wagered on, forcing a round of heavy short covering. Risk appetite in broader markets was revived after U.S. President Donald Trump said on Tuesday that he could let the March 1 deadline for a trade agreement with China "slide for a little while," but that he would prefer not to and expects to meet with Chinese President Xi Jinping to close the deal at some point. U.S. tariffs on $200 billion worth of imports from China are scheduled to rise to 25 percent from 10 percent if the two sides cannot reach a deal by the deadline, increasing pain and costs in sectors from consumer electronics to agriculture. The main focus for the markets is the high-level talks this week in China, where the world's two largest economies attempt to hammer out a trade deal. Financial markets have been rattled by the trade tensions over the past year, with business sentiment taking a hit globally as the fallout of the U.S.-China dispute disrupted factory activity and hurt global growth. The dollar index, a gauge of its value versus six major peers, was marginally lower at 96.65, having lost 0.35 percent on Tuesday. The dollar was steady versus the yen at 110.50. Elsewhere, sterling gained 0.1 percent to $1.2900. Traders expect the British pound to remain volatile over the coming weeks as a Brexit deadline looms. The United Kingdom is on course to leave the European Union on March 29 without a deal unless Prime Minister Theresa May can persuade the bloc to amend the divorce deal she agreed last year. The greenback was down 0.2 percent versus the Canadian dollar at C$1.3206, after weakening 0.5 percent in the previous session. The loonie has been supported by a rise in oil prices overnight due to improving risk appetite.