Rupee opened little changed, Dollar lower vs. major currencies

Monday,   10-Aug-2020   10:50 AM (IST)

The Indian rupee opened the day little changed at 74.9550/9650 levels compared to its previous close at 74.9275/9375 levels with anticipated portfolio dollar inflows balancing broad decline in Asian currencies. Indian government bond yields rise in thin early trade as sentiment bearish on supply pressure and lack of central bank support. The equity markets were trading half a per cent higher on Monday, lifted mainly by pharma stocks. At 10:17 AM, the S&P BSE Sensex was trading at 38,356 up 315 point, while the broader Nifty50 was at 11,312 up 98 point. As per the technical indicators range for the USDINR pair may be 74.70-75.10 levels. Rupee has an immediate support at 75.01 levels. A breach of the same may see rupee at 75.10 followed by 75.22 levels. On the positive side rupee is likely to face resistance at 74.87 levels and if it is able to break the same then it may gain up to 74.74 levels followed by 74.63 levels.

The dollar was down on Monday morning in Asia, despite Friday’s better-than-expected U.S. payrolls report which pushed Treasury yields higher. Non-farm payrolls rose by 1.763 million in July, against the estimated 1.6 million increase. The unemployment rate also fell to 10.2% in July, compared to June’s reading of 10.5%. But continuing doubts over the U.S. economic recovery remain, with the U.S. surpassing the grim milestone of five million COVID-19 cases as of August 10, according to Johns Hopkins University. The dollar’s longest losing streak in a decade has also left a structural gap in much of the market for the currency, as well as leaving it vulnerable to a squeeze on any positive news. Meanwhile, U.S. President Donald Trump kept his promise to take executive action if the U.S. Congress failed to reach a consensus over the country’s latest stimulus measures. Trump signed four executive orders on Sunday related to COVID-19 economic relief, unemployment benefits, a temporary payroll tax deferral, eviction protection and student-loan relief. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin also said on Sunday said they were open to continuing talks for further COVID-19 stimulus measures. The USD/CNY pair rose 0.05% to 6.9697. China reported a better-than-expected consumer price index for July, with a 0.6% increase month-on-month and a 2.7% increase year-on-year. The producer price index also beat expectations, although it shrank 2.4% year-on-year in July. Investors are also keeping an eye on simmering U.S.-China tensions after the U.S. imposed sanctions on senior Hong Kong and Chinese officials, including Hong Kong’s Chief Executive Carrie Lam, on Friday. Officials from both sides are still scheduled to meet to discuss trade later in the week, on August 15.