Rupee opened higher, Dollar under pressure vs. major currencie

Monday,   27-Jul-2020   11:09 AM (IST)

The Indian rupee opened the day higher at 74.7050/7150 levels compared to its previous close at 74.83/84 levels as upbeat global risk appetite sent the dollar index to its lowest level in nearly two years. Indian government bond yields marginally lower as some traders cover short positions. Equity markets slumped over half a per cent on Monday dragged down by financials and pharma stocks. At 10:14 AM, the S&P BSE Sensex was trading at 37,868 down 261 point, while the broader Nifty50 was at 11,116 down 78 point. As per the technical indicators range for the USDINR pair may be 74.50-75.00 levels. Rupee has an immediate support at 74.86 levels. A breach of the same may see rupee at 75.01 followed by 75.15 levels. On the positive side rupee is likely to face resistance at 74.66 levels and if it is able to break the same then it may gain up to 74.51 levels followed by 74.40 levels.

The dollar began the week under pressure from all corners as intensifying Sino-U.S. tensions added to worries that the coronavirus resurgence in United States could undermine the recovery in the world’s biggest economy. In morning trade it fell to a four-month low against the yen and a new 22-month trough on the euro at $1.1699. The Antipodean currencies also rose a little and against a basket of currencies the dollar was at its lowest since September 2018. The lack of support for the greenback, even as tit-for-tat consular closures marked the latest escalation in U.S.-China tensions, is a shift for the dollar which has been closely tracking global sentiment through the coronavirus crisis. It also comes with a broad re-evaluation of the euro’s value after a landmark European agreement on a fiscal rescue package just as cracks start to emerge in the U.S. labour market rebound. The Australian dollar took advantage and edged ahead in spite of a rise in local coronavirus cases, climbing to $0.7120. The New Zealand dollar rose 0.3% to $0.6657. Both, however, remain below recent peaks and were under pressure against the yen as the broader mood remained grim in the shadow of rising infections and simmering geopolitical tensions. Staffs of the U.S. consulate in Chengdu were making final efforts to clear out ahead of a Monday deadline to shut the outpost in response to the U.S. ordering China’s Houston consulate to close amid allegations of spying. Elsewhere, investors are also beginning to fret about U.S. political deadlock over the next round of fiscal stimulus with a month-end deadline looming to extend some unemployment benefits. The White House and Senate Republicans reached an agreement on the way forward over the weekend but it remains to be seen whether it will be acceptable to Democrats in the House. Last week a recovery in the U.S. job market unexpectedly stalled, while purchasing manager surveys showed Europe’s recovery pulling ahead - adding to nerves about any letup in U.S. stimulus.