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Rupee inches up, GBPUSD on back foot

Wednesday,   09-Oct-2019   12:21 PM (IST)

The Indian rupee has inches up to 71.13/14 levels (12:15 pm) in the afternoon levels after touching the high of 71.10/11 levels on dollar selling in the market. Rupee slipped to 71.21/22 levels early today as mounting concerns over the outlook of U.S. and China trade talks marred appetite for Asian assets. Benchmark Indices are at day's high. At 12:12 PM, the S&P BSE Sensex was trading at 37,820, up 289 points, while the broader Nifty50 was at 11,213, up 86 points. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 70.80-71.40 levels. Rupee has an immediate support at 71.17 levels. A breach of the same may see rupee at 71.25 followed by 71.33 and 71.45 levels. On the positive side rupee is likely to face resistance at 71.07 levels and if it is able to break the same then it may gain up to 70.96 levels followed by 70.82 and 70.68 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 3.67%, 3.65% and 4.86% respectively.

The US slapped visa restrictions on Chinese officials involved in human rights violations in Xinjiang. The news dampens the mood ahead of high-level trade talks on Thursday. A Chinese ban of American basketball and reports that the Chinese delegation will cut short its visit to Washington also weighs on sentiment. The administration is still considering limits on US investments in China. The world's second-largest economy has vowed to retaliate, perhaps by curbing American companies' activities in the country. Jerome Powell, Chair of the Federal Reserve, has acknowledged that the Fed's balance sheet is growing due to intervention in the repo market. However, he stressed that the current growth of the bank's balance sheet should not be confused with a new QE program. Powell reiterated that the US economy is doing well but left the door open to additional rate cuts. He will speak again today. The FOMC Meeting Minutes are due out late in the day and are set to shed more light on the splits within the world's most powerful central bank. See FOMC Minutes September 17-18 Meeting Preview: Balancing the odds. Prime Minister Boris Johnson faces a cabinet rebellion and many retirements from his Conservative Party as he nears a no-deal Brexit. The news follows an unpleasant call between Johnson and German Chancellor Angela Merkel. Accounts of the conversation are disputed, but the conclusion on both sides is that reaching a deal in next week's EU Summit has lower chances. Extending Article 50 remains the most probable outcome, with June 2020 being circled as a potential new deadline. Johnson is set to meet his Irish counterpart Leo Varadkar later this week GBP/USD remains on the back foot.