Rupee lower, USDJPY lower

Monday,   11-Nov-2019   12:20 PM (IST)

The Indian rupee is trading lower at 71.45/46 levels in the afternoon deals tracking weakness in most Asian currencies on account of rising political unrest in Hong Kong and amid U.S. and China trade deal uncertainty. So far rupee traded in the range of 71.3150-71.45 levels. Appetite for regional currencies and assets was not helped by comments by President Donald Trump over the weekend that he had not agreed to a removal of tariffs on Chinese goods. Trump further said that talks were moving along well but a deal would be signed only it was right for U.S. After rallying to new highs everyday last week, equity markets entered in the consolidation mode and are trading in red today. At 12:11 PM, the S&P BSE Sensex was trading at 40,171, down 152 points, while the broader Nifty50 was at 11,860, down 48 points. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 71.10-71.60 levels. Rupee has an immediate support at 71.49 levels. A breach of the same may see rupee at 71.54 followed by 71.62 and 71.80 levels. On the positive side rupee is likely to face resistance at 71.35 levels and if it is able to break the same then it may gain up to 71.26 levels followed by 71.17 and 71.07 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 3.25%, 3.37% and 3.90% respectively.

Cautious trading sentiment highlighted the Asian session at the start of a fresh week this Monday, as the Hong Kong violence added the looming US-China trade deal anxiety and triggered a flight to safety across the board. Therefore, the safe-havens such as the Yen, gold and Swiss franc traded on the front foot while the risk assets in oil, Aussie and Asian equities suffered. The Asian stocks were mainly dragged lower by a 2% drop in Hong Kong’s Hang Seng index. Despite the risk-off action, the US Treasury yields managed to recover some ground after last week’s slump. Across the G10 currencies, the Kiwi emerged as the strongest, ditching the price action in its OZ counterpart, the Aussie. The NZD/USD pair tested 0.6350, up 0.30% while the Aussie kept range near weekly lows of 0.6847. Meanwhile, USD/JPY retraced from five-month tops and retests 109.00 amid risk-aversion. Both the European currencies, the EUR/USD pair remains close to three-week lows of 1.1017 while the Cable consolidates the early gains below 1.2800, hurt by Moody’s outlook downgrade. .