Rupee inches low, Australian Dollar off lows

Thursday,   10-Oct-2019   12:22 PM (IST)

The Indian rupee is trading lower at 71.0750/0850 levels in the afternoon deals on dollar buying in the market. Rupee opened higher today at 70.95/96 levels after report that a currency pact could be part of the U.S.-China trade deal, boosting Yuan and other Asian currencies. Foreign banks have been on dollar bids, likely for their custodial clients. Equity markets are highly volatile.  Sensex and Nifty are trading lower. At 12:10 PM, the S&P BSE Sensex was trading at 37,875, down 303 points, while the broader Nifty50 was at 11,232, down 82 points. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 70.80-71.30 levels. Rupee has an immediate support at 71.11 levels. A breach of the same may see rupee at 71.22 followed by 71.36 and 71.44 levels. On the positive side rupee is likely to face resistance at 70.99 levels and if it is able to break the same then it may gain up to 70.89 levels followed by 70.81 and 70.74 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 3.63%, 3.76% and 5.00% respectively.

Currencies whipsawed on Thursday as news suggesting division, then detente in Sino-U.S. trade talks sparked volatility, with riskier Asian currencies ultimately rallying over a sinking dollar. Investors, parsing headlines for any clues that tensions weighing on global growth could be resolved, turned from downcast to bullish after Bloomberg reported a currency pact could be part of a deal suspending further tariff hikes. China's Yuan, the most sensitive currency to the trade war, bounced to a two-week high from a month-low in offshore trade, gaining 0.3% by mid-session and pulling the trade-exposed Australian and New Zealand dollars up with it. The safe-haven Japanese yen, which had first jumped on a gloomy report in the South China Morning Post suggesting U.S.-China talks in Washington were headed for stalemate, gave up its gains to trade flat on the dollar at 107.46. Besides steadying on the yen, the dollar fell against most other major currencies, dropping 0.3% on the antipodean dollars and 0.2% on the euro and pound. It last stood weaker against a basket of currencies at 98.98. The Australian dollar lifted from a week low to $0.6746 and the New Zealand dollar rose to $0.6311. The euro rose to $1.0991 and the Chinese Yuan rose to 7.1153 in onshore trade, its strongest since Sept. 24. The pound climbed to $1.2228, though it remains close to a one-month low and weighed down by uncertainty over Britain’s exit from the European Union, as hopes for progress on a key sticking point were dashed overnight.