Rupee ended higher, Pound lower vs. Dollar

Tuesday,   09-Jul-2019   05:25 PM (IST)

The Indian rupee ended the session higher at intraday high of 68.54/55 levels compared to its opening at 68.62/63 levels on foreign banks’ greenback sales, as local shares recouped most of its recent losses. Rupee touched the low of 68.8450/8550 levels early today tracking the losses in domestic equities and dollar buying by foreign banks. Broad market focus remained on the U.S. Federal Reserve Chairman Jerome Powell’s testimony later in the week. Equity markets witnessed a volatile trade today as investors looked for clarity on issues of taxation on share buyback and surcharge on FPI investment. Furthermore, waning rate cut hopes from the US Federal Reserve dented sentiment across Asian markets. Markets pared losses and ended the session on a flat note. The Sensex closed 10.25 points, or 0.03 per cent, higher at 38,731 levels. The broader Nifty50, too, settled 2.7 points, or 0.02 per cent, lower at 11,556 levels. Indian government bonds fell for the first time in six sessions, as investors sold notes to benefit from a recent price rally after New Delhi proposed to raise funds overseas and narrowed the fiscal deficit target. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.08%, 4.05% and 4.25% respectively.

The GBP/USD pair finally broke down of its Asian session consolidation phase and dropped to fresh multi-month lows, around 1.2445 regions. The US Dollar remained well supported by the fact that investors have been scaling back expectations for an aggressive policy easing by the Fed at its upcoming meeting on July 30-31, especially after Friday's upbeat headline NFP print for June. Meanwhile, the British Pound was weighed down by speculations that the BoE will soon join other major central banks in easing monetary policy and persistent fears of a no-deal Brexit, reinforced by the latest comments by Irish Finance Minister. Ireland’s Finance Minister Donohoe recently cross the wires saying he is very confident that the new EU leaders will continue to show support to Ireland in Brexit talks but also warned that the prospect of disorderly Brexit is now a significant risk. The already weaker sentiment deteriorated further following the release of the latest Bloomberg survey of economists, forecasting that the UK economy probably contracted for the first time in 7 years during the second quarter of 2019. The pair already seems to have found acceptance below the key 1.2500 psychological mark and hence, a follow-through weakness, led by some fresh technical selling amid the UK political and economic uncertainty, now looks a distinct possibility. Later during the early North-American session, scheduled speeches by influential FOMC members - including the Fed Chair Jerome Powell, will now be looked upon for fresh clues about the central bank's policy outlook and produce some meaningful trading opportunities.