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Rupee turns lower, Australian Dollar up

Tuesday,   14-Jan-2020   12:20 PM (IST)

The Indian rupee turns lower and is currently trading at 70.90/91 levels (12:15 pm) in the afternoon deals after touching the low of 70.9575/9675 levels amid worries that the CPI inflation reading could prompt more outflows from local bonds. So far rupee traded in the range of 70.74-70.9575 levels. Rupee opened higher on the back of positive regional cues. Wholesale prices-based inflation rose to 2.59 per cent in December, as against 0.58 per cent in November due to increase in prices of food articles Data released late yesterday showed that India’s retail inflation accelerated to 7.35% in December, the highest since July 2014, on rising food prices. At 12:10 PM, the S&P BSE Sensex was trading at 41,874, up 15 points, while the broader Nifty50 was at 12,343, up 14 point. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 70.70-71.20 levels. Rupee has an immediate support at 70.99 levels. A breach of the same may see rupee at 71.08 followed by 71.21 and 71.33 levels. On the positive side rupee is likely to face resistance at 70.77 levels and if it is able to break the same then it may gain up to 70.65 levels followed by 70.55 and 70.46 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 3.73%, 3.99% and 4.18% respectively.

The risk-on sentiment extends into Asia this Tuesday after the US Treasury retracted its decision in August to designate China as a currency manipulator. Further, an imminent US-China phase one trade deal signing on Wednesday amid signs of goodwill gestures for both sides buoyed the market mood. The Asian equity markets reached seven-month highs amid risk-on trades at the expense of the safe-havens such as gold and the Japanese yen. The anti-risk yen fell to eight-month lows of 110.21 vs. its American rival in early trades. USD/JPY eased-off highs but traded above the 110 handle towards Asia closing. The Antipodeans traded weaker despite the surge in the Chinese Yuan and solid Trade data from China, as broad-based US dollar rebound combined with the negative impact of the Australian bushfire crisis weighed on the prices. The Aussie bounced-off 0.6885 lows and battled the 0.69 handle while the Kiwi posted small losses on the 0.6600 level. Gold-price weakness and depressed oil prices also could be also behind the negative tone seen in the commodity-currencies. The Chinese Yuan was the top gainer, with USD/CNY downed to five-month lows of 6.8669. Among the European currencies, both EUR/USD and the cable consolidated the recovery gains heading into the key US data release due later on Tuesday.