Rupee opened lower, Dollar edges higher vs. major currencies

Wednesday,   10-Jul-2019   09:02 AM (IST)

The Indian rupee opened the day lower at 68.62/63 levels compared to its previous close at 68.54/55 levels as US crude headed for fifth day of advance. Benchmark US crude up at $58.60 per barrel, while Brent crude climbs to $64.74. Indian government bonds trading lower for second session, as uptick in crude oil prices weigh. Benchmark indices struggled to find a direction in early trade and were oscillating between gains and losses. At 9:22 AM, the S&P BSE Sensex was trading at 38,776, up 45 point, while the broader Nifty50 was at 11,570, up 14 point. Indian federal government bonds lower on profit booking after five-session rally. As per the technical indicators range for the USDINR pair may be 68.40-68.95 levels. Rupee has an immediate support at 68.74 levels. A breach of the same may see rupee at 68.94 followed by 69.04 levels. On the positive side rupee is likely to face resistance at 68.42 levels and if it is able to break the same then it may gain up to 68.32 levels followed by 68.12 levels.

The dollar edged toward a three-week high against a basket of major currencies on Wednesday, as an unwinding of bets on deep U.S. interest rate cuts pushed Treasury yields higher. Further gains in the greenback depend on the tone Federal Reserve Chairman Jerome Powell strikes during two days of Congressional testimony starting later on Wednesday. Expectations for a 50 basis point rate cut at a Fed meeting later this month have evaporated, but investors still expect a 25 basis point rate cut due to weak inflation and worries about the U.S.-China trade war. The dollar could continue to edge higher if Powell's comments on the U.S. economy are perceived as neutral or even slightly hawkish, which would support the argument that additional rate cuts will be limited. Renewed strength in the dollar would be an extra worry for the British pound, which is stuck near a six-month low due to uncertainty over how Britain will avoid a messy no-deal exit from the European Union. In Asian trading, the index that tracks the greenback against six other major currencies was at 97.518 after touching 97.588 on Tuesday, which was the highest since June 19. The dollar edged up to 108.975 yen in Asia, which was its strongest level since May 31. The benchmark 10-year Treasury yield was at 2.067%, up from a 2-1/2-year low of 1.9390% reached on July 3. Stronger-than-expected employment growth in June tempered expectations that the Fed would opt for aggressive rate cuts at a meeting ending July 31. The probability of a 25 basis point cut was 97.5% on Wednesday, with a 2.5% chance of a 50-point cut. A week prior, those forecasts were 75% and 25% respectively. Traders will also closely scrutinize the release later on Wednesday of minutes from Federal Open Market Committee's previous meeting. Sterling was last quoted at $1.2455 after skidding to a new six-month low of $1.2439 on Tuesday, with Brexit jitters and growing expectations of a Bank of England rate cut adding to the currency's weakness. Against the dollar, the euro was little changed at $1.1204 after hitting $1.1194, which was the lowest in nearly three weeks.