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Rupee opened lower, Dollar up vs. major currencies

Wednesday,   14-Oct-2020   10:49 AM (IST)

The Indian rupee opened the day lower at 73.3850/3950 levels compared to its previous close at 73.3550/3650 levels amid muted Asian cues and a rebound in the dollar index. India's federal government bond yields largely unchanged as traders await fresh triggers including first outright open market bond purchase from the central bank tomorrow. Equity markets were trading over half a per cent lower on Wednesday ahead of the Supreme Court hearing on a batch of petitions seeking a waiver of interest on loans during the moratorium period. At 10:12 AM, the S&P BSE Sensex was trading at 40,371, down 254 point, while the broader Nifty50 was at 11,844 down 90 point. As per the technical indicators range for the USDINR pair may be 73.25-73.65 levels. Rupee has an immediate support at 73.45 levels. A breach of the same may see rupee at 73.56 followed by 73.72 levels. On the positive side rupee is likely to face resistance at 73.32 levels and if it is able to break the same then it may gain up to 73.22 levels followed by 73.05 levels.

The dollar was up on Wednesday morning in Asia, holding onto gains from the previous session as further setbacks in developing a COVID-19 treatment and a lack of consensus over the latest stimulus measures in the U.S. sent investors scrambling for safety. The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.01% to 93.550. Eli Lilly and Co. on Tuesday paused its government-sponsored clinical trial of its COVID-19 antibody treatment, like one taken by President Donald Trump during his bout with the virus. The pause comes on the heels of Johnson & Johnson suspending clinical trials for its COVID-19 vaccine on Monday due to a mystery illness in one of the participants, and dampened hopes that a treatment would be released soon. Hopes that Congress would pass the latest stimulus bill ahead of the Nov. 3 presidential election continue to fade, dampening the economic outlook. Although no big moves are anticipated ahead of the election, some investors predicted that the dollar would continue to be supported by the dampened sentiment over the next few days. Other investors listed even more reasons to be optimistic about the greenback’s prospects. The USD/JPY pair edged down 0.11% to 105.35. The USD/CNY pair inched down 0.02% to 6.7440. Investors continue to monitor the impact of PBOC’s attempts to stem the Yuan’s recent appreciation, after the central bank announced on Monday, that it would remove financial institutions’ reserve requirement ratio when conducting foreign exchange forwards trading. Investors also await a speech from China President Xi Jinping in Shenzhen later in the day, in which he is expected to map out a vision for the region’s growth. The AUD/USD pair inched up 0.08% to 0.7166. Although the AUD was little changed earlier in the session, an ongoing coal imports spat between Canberra and Beijing sparked concern about the AUD adding to the 1.5% decline it saw during Tuesday’s session. Across the Tasman Sea, the NZD/USD pair edged up 0.17% to 0.6659, with the NZD holding steady against the greenback as the country prepares to vote in a Oct.17 general election. The GBP/USD pair inched up 0.01% to 1.2935. The pound extended declines as the U.K. continues to battle a second wave of COVID-19 cases and re-implements measures restricting economic activity. Further adding to the pound’s woes are worries about the little progress made towards a Brexit deal between the U.K. and the European Union, with less than two days to go ahead of Prime Minister Boris Johnson’s self-implemented Oct. 15 deadline. The possibility that the Bank of England could introduce negative interest rates also dampened investor sentiment.