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Rupee ended off highs, Pound extends gain vs. Dollar

Thursday,   11-Jul-2019   05:33 PM (IST)

The Indian rupee ended the session off intraday highs at 68.44/45 levels compared to its opening at 68.30/31 levels after touching the low of 68.53/54 levels as private banks stepped up greenback purchases that trimmed early gains triggered by dovish remarks from the U.S. Federal Reserve. Traders suspected presence of central bank for dollar purchases at the day’s high today that capped further rise in the rupee. Rupee traded in the range of 68.29-68.53 levels today. Indian shares ended higher, driven by broad-based gains and tracking strength across global equities, after dovish comments by U.S. Federal Reserve Chairman Jerome Powell reignited rate-cut hopes. The broader NSE index closed up 0.73% at 11,582.90, while the benchmark BSE index settled 0.69% higher at 38,823.11. Indian government bonds rose for a second day, with the benchmark paper ending at a record high, driven by gains in the local currency and as traders expect retail inflation to remain below the central bank’s target. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 3.85%, 4.21% and 4.43% respectively.

GBP/USD is trading closer to 1.2565, extending its gains. Fed Chair Powell's dovish words weigh on the USD. BOE Gov. Mark Carney has said that a no-deal Brexit could cause a material economic disruption. EUR/USD is trading on high ground near 1.1275 after Fed Chair Powell opened the door to cutting rates. He speaks again later today. The ECB minutes are set to be dovish as well. The dollar was stuck at a five-day low on Thursday after Federal Reserve Chair Jerome Powell kept the door open for U.S. interest rate cuts, though investors were wary of selling dollars aggressively until a policy review later this month. With U.S. inflation data due shortly, traders are prepared to sell dollars if the data undershoot forecasts. But analysts say the bigger risk may be that inflation beats expectations and causes to dollar to rebound. In testimony to Congress, Powell pointed to “broad” global weakness that was clouding the U.S. economic outlook amid uncertainty about the fallout from the trade conflict with China and other nations. His comments did little to change market expectations — money markets expect one rate cut later this month and a cumulative 68 basis points of cuts until the end of 2019 — but market watchers said Powell’s views will drive the dollar. Against a basket of other currencies, the dollar fell 0.2% to 96.83, its lowest since July 5 and near the three-month low of 95.84 from late June.