Rupee off highs, Australian dollar up

Tuesday,   24-Mar-2020   12:17 PM (IST)

The Indian rupee is trading off highs at 76.11/12 levels in the afternoon deals after touching the low of 76.20/21 levels on dollar buying in the market. Rupee opened higher and touched the high of 76.0150/0250 levels today tracking other Asian currencies and pullback in the dollar index after the Federal Reserve announced a series of additional measures to combat the impact of the coronavirus. Most Asian currencies and equities rose after the Fed’s announcement yesterday that it will buy potentially unlimited amount of assets and agency mortgage-backed securities to offset the immediate economic hit from the virus. Further, the Fed said it will back purchases of corporate bonds and announced credit facilitates to support new bond and loan issuance to provide liquidity. At 12:11 PM, the S&P BSE Sensex was trading at 26,567, up 586 points, while the broader Nifty50 was at 7,784, up 174 point. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 75.50-76.50 levels. Rupee has an immediate support at 76.20 levels. A breach of the same may see rupee at 76.29 followed by 76.39 and 76.48 levels. On the positive side rupee is likely to face resistance at 76.02 levels and if it is able to break the same then it may gain up to 75.92 levels followed by 75.83 and 75.74 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 5.35%, 4.60% and 4.40% respectively.

A better market mood emerged in Asia on Tuesday, as the overall sentiment was boosted by the progress on the coronavirus economic relief deal worked on by the US Congress. Further, the Fed’s unlimited QE eased the pressure off the credit markets and pushed the US dollar further south while reviving the risk-on trades.  The looming concerns about the virus-led lockdowns across the globe and its economic fallout took a back seat for now. The US stocks futures rallied alongside the US Treasury yields and Asian markets, as the Japanese stocks surged over 7%. Gold prices extended the overnight gains and tested the 1600 level on Fed’s aggressive easing. Oil prices also rebounded amid a risk-on market profile. Within the G10 currency markets, most majors extended the rebound on the extension of the losses in the US dollar across the board. The Aussie, however, outperformed and jumped as high as 0.5950, tracking the solid rise in gold and oil prices. The Kiwi also rallied 1% and briefly regain 0.5800 while USD/CAD lost 0.50% to test the bids just below the 1.4400 level. USD/JPY extended the drop but found support just above 110.00, rescued by the rally in equities. Meanwhile, EUR/USD, on the other hand, held onto the recovery gains around 1.0800 while the Cable defended the 1.1600 mark amid stringent measures deployed by the UK PM Johnson to battle the virus spread.