Rupee opened lower, Pound lower vs. Dollar

Wednesday,   09-Oct-2019   09:02 AM (IST)

The Indian rupee opened the day lower 71.18/19 at levels compared to its previous close at 71.02/03 levels as most Asian currencies and equities decline on fading optimism over US-China trade deal. Asian equities and currencies slip after Trump administration imposes visa restrictions on Chinese officials and puts number of Chinese companies on blacklist, citing human rights violation of ethnic minority group. US steps come ahead of beginning of high level trade talks in Washington on Thursday. Indian government bonds trading higher in thin-volume early trade, as some traders continue to cover short positions. Indian equity markets opened flat. At 9:18 AM, the S&P BSE Sensex was trading at 37,567, up 35 point, while the broader Nifty50 was at 11,130, up 3 point. As per the technical indicators range for the USDINR pair may be 70.80-71.40 levels. Rupee has an immediate support at 71.22 levels. A breach of the same may see rupee at 71.36 followed by 71.48 levels. On the positive side rupee is likely to face resistance at 71.02 levels and if it is able to break the same then it may gain up to 70.89 levels followed by 70.76 levels.

The British pound nursed losses on Wednesday, after hitting a one-month low on reports that Brexit talks between Britain and the European Union were close to breaking down, while the dollar weakened slightly on rising trade tensions. In a telephone call on Tuesday, German Chancellor Angela Merkel told British Prime Minister Boris Johnson that a deal was "overwhelmingly unlikely," a Downing Street source said. That leaves the outcome on Oct. 31, when Britain is due to quit the EU, deeply uncertain, and the pound dropped half a percent to its lowest since early September. It recouped a fraction of the fall in Asian trade to hold at $1.2217. The dollar, meanwhile, gave up some ground gained overnight as the U.S. imposition of visa restrictions on Chinese officials over the treatment of Muslim minorities threatened to derail already delicate trade negotiations. The move, together with the blacklisting of Chinese firms over the same issue, cast a pall over Sino-U.S. talks in Washington, sending investors to safety. The safe-haven Japanese yen edged higher, with the dollar buying 107.00 yen. In other markets, stocks tumbled and bond yields fell. Safe-haven flows had also supported the dollar overnight, along with comments from Federal Reserve Chairman Jerome Powell, which were interpreted as suggesting further rate cuts later in October were not a done deal. On Wednesday, against a basket of currencies the dollar (DXY) was slightly softer at 99.126, while it fell marginally against the trade-exposed Australian and New Zealand dollars. U.S. and Chinese trade deputies are meeting in Washington ahead of high-level talks involving Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Thursday. But prospects for progress appear to be dimming as tensions rise. A Chinese diplomat told Reuters that China wanted a deal, but it cannot be a "zero-sum game". The Trump administration, meanwhile, is moving ahead with discussions around restrictions on capital flows into China, Bloomberg reported on Tuesday, citing people familiar with the matter.