Rupee opened flat, Dollar lower vs. major currencies

Wednesday,   29-Jul-2020   10:41 AM (IST)

The Indian rupee opened the day flat at 74.83/84 levels compared to its previous close at 74.83/84 levels ahead of Fed’s policy review. Indian government bond yields tad lower as market participants await auction of new 10-year note later in the week. Equity markets fluctuated between gains and losses in a volatile start on Wednesday on the back of mixed cues in Asian equities. At 10:06 AM, the S&P BSE Sensex was trading at 38,386 down 107 point, while the broader Nifty50 was at 11,286 down 14 point. As per the technical indicators range for the USDINR pair may be 74.50-75.00 levels. Rupee has an immediate support at 74.93 levels. A breach of the same may see rupee at 75.02 followed by 75.13 levels. On the positive side rupee is likely to face resistance at 74.73 levels and if it is able to break the same then it may gain up to 74.62 levels followed by 74.53 levels.

The U.S. dollar was down on Wednesday morning in Asia over continuous investor worries over the U.S. economic recovery that capped the greenback’s gains. Investors are no longer able to count on higher returns from the dollar’s compared to other currencies due to the question marks over U.S. economic growth. Goldman Sachs on Tuesday warned that a potential U.S. Federal Reserve shift “towards an inflationary bias” along with record high debt levels by the United States government are raising “real concerns around the longevity of the U.S. dollar as a reserve currency.” The Fed is scheduled to convene later in the day and is widely expected to retain its dovish stance as the economy continues to be impacted by COViD-19. Four states reported record numbers of COVID-19 cases over a 24-hour period on Tuesday, with over 4.3 million cases reported nationwide as of July 29, according to Johns Hopkins University. The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.01% to 93.703. The dollar’s loss was gold's gain, with investors flocking to the safe-haven yellow metal and keeping gold futures at record-high levels. Meanwhile, Republicans and Democrats continue to wrestle over the latest COVID-19 stimulus measures, with some Republicans opposed to even their own party’s proposed $1 trillion proposal. Investors will be watching to see whether a consensus can be reached before some measures expire on Friday.