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Rupee higher, Australian Dollar lower

Thursday,   16-May-2019   12:22 PM (IST)

The Indian rupee is trading higher at 70.24/25 levels (12:12 pm) in the afternoon deals after touching the high of 70.22/23 levels helped by a rebound in most regional currencies after weak U.S. data. However, rising oil prices and wider-than-expected domestic trade deficit is expected to cap the currency's advance. So far rupee traded in the range of 70.22-70.3175 levels. India’s trade deficit widened to $15.3 billion in April from $10.9 billion in the previous month, data released late yesterday showed. Indian shares are little changed in light trade. At 12:06 PM, the S&P BSE Sensex was trading at 37,148 up 33 points, while the broader Nifty50 was at 11,172, up 15 points. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 69.90-70.60 levels. Rupee has an immediate support at 70.30 levels. A breach of the same may see rupee at 70.40 followed by 70.48 and 70.56 levels. On the positive side rupee is likely to face resistance at 70.20 levels and if it is able to break the same then it may gain up to 70.11 levels followed by 69.99 and 69.88 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 4.38%, 4.38% and 4.32% respectively.

The renewed tensions between the US and China kept the risk tone broadly softer in the Asian trading this Thursday. The US President Trump signed an executive order on Wednesday, declaring a national emergency on information security and laying the ground for the US ban on China’s Huawei. Therefore, forex today witnessed cautious trading, with the safe-haven Yen keeping an upper edge over its American peer. The USD/JPY pair dropped to lows near 109.30 levels before having recovered to 109.50 region. The AUD/USD pair faced a double whammy, with risk-aversion on one hand while an uptick in the Australian jobless rate increased the odds of an RBA rate cut and pressured the Aussie on the other hand. The Kiwi was also offered and breached the 0.6550 level. The resource—linked Loonie traded modestly flat below 1.3450, despite the gains in oil prices amid mounting US-Iran geopolitical tensions.  Meanwhile, gold futures on Comex were unfazed by ongoing trade concerns and kept its range below the 1300 mark. Amongst the European currencies, the EUR/USD pair clung to the 1.12 handle, supported by the reports that the US President Trump delayed the decision on the auto tariffs on the EU. Meanwhile, the Cable faded the bounce to 1.2865 and treaded water near 1.2850 region ahead of the key meeting between the UK PM May and her party members that will decide her the fate as the UK Prime Minister.