Rupee ended tad higher, Euro lower vs. Dollar

Wednesday,   10-Jul-2019   05:31 PM (IST)

The Indian rupee ended the session at 68.5650/5750 levels compared to its opening at 68.62/63 levels after touching the high of 68.4850/4950 levels as foreign banks stepped up greenback sales likely for foreign fund inflows into local debt, trimming early decline from higher crude oil prices. However, strong resistance is seen at around 68.50 levels because of suspected dollar purchases by state-run lenders, likely for the central bank around the same level. Rupee touched the low of 68.6750/6850 levels in early deals weighed by rise in oil prices. Rupee remained steady today in line with most Asian peers, as investor’s awaited testimony of Federal Reserve Chairman Jerome Powell, due later today. Indian government bonds surged, with the benchmark yield falling to a 22-month low, driven by likely purchases by foreign investors and as rate cut bets gained strength. Indices ended today's volatile session in the negative territory. The benchmark S&P BSE Sensex ended 174 points, or 0.45 per cent, lower at 38,557 levels. The broader Nifty50 settled 57 points, or 0.49 per cent, lower at 11,498 levels. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.92%, 4.06% and 4.35% respectively.

GBP/USD is trading above 1.2470, up from the lows. UK GDP rose by 0.3% as expected while manufacturing production missed and trade balance beat expectations. EUR/USD trades around 1.1200, marginally lower. Fed Chair Jerome Powell's testimony is highly-anticipated. He is set to signal a rate cut later this month. The ECB is also set to loosen policy. The euro held near a three-week low against the dollar on Wednesday as investors trimmed expectations of aggressive rate cuts from the U.S. Federal Reserve later this month, pushing U.S. Treasury yields and the greenback higher. Expectations of easier monetary policy from U.S. policymakers soared last month and traders were waiting to see if Fed Chair Jerome Powell would give more clues on its plans during Congressional testimony starting 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 points cut due to weak inflation and worries about growing business fallout from the U.S.-China trade war.