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Rupee opened higher, Dollar lower vs. major currencies

Tuesday,   17-Nov-2020   10:50 AM (IST)

The Indian rupee opened the day higher at 74.45/46 levels compared to its previous close at 74.60/61 levels as another potentially effective coronavirus vaccine prompts economic recovery bets. India's federal government bond yields flattish ahead of state debt sale. Domestic equity indices hit scaled fresh lifetime highs on Tuesday as positive news from Moderna Inc, that its Covid-19 vaccine has 94.5 per cent efficacy rate, boosted investor sentiment. At 10:04 AM, the S&P BSE Sensex was trading at 43,922, up 284 point, while the broader Nifty50 was at 12,875 up 94 points. As per the technical indicators range for the USDINR pair may be 74.25-74.75 levels. Rupee has an immediate support at 74.55 levels. A breach of the same may see rupee at 74.72 followed by 74.88 levels. On the positive side rupee is likely to face resistance at 74.35 levels and if it is able to break the same then it may gain up to 74.22 levels followed by 74.08 levels.

The dollar was down on Tuesday morning in Asia, despite optimism over the latest positive news on the COVID-19 vaccine front. This is as more U.S. states introduce restrictive measures to curb the virus and as worries about a smooth transfer of presidential power in the U.S. in January mount up. The U.S. Dollar Index Futures that tracks the greenback against a basket of other currencies inched down 0.04% to 92.502. Moderna Inc reported a 94.5% efficacy rate for its candidate mRNA-1273 on Monday on the back of its large, late-stage phase III COVE study. The news follows Pfizer Inc and BioNTech's  announcement during the previous week that their jointly developed candidate, BNT162b2, prevented more than 90% of symptomatic infections. The Pfizer news saw the dollar rise against safe-haven currencies such as the yen and Swiss franc. However, the logistics of producing and distributing the vaccine, distributing the vaccine, which suggests it is not likely to be available anytime soon, curbed the initial enthusiasm and subdued market reactions. Also dampening the enthusiasm is the continual rise in COVID-19 cases globally. Several U.S. states reported a record number of cases, hospitalizations and deaths, with officials’ response to these figures of more concern to investors. The U.K., Europe and Japan reported an increased number of cases, with over 54.8 million cases globally as of Nov.17, according to Johns Hopkins University. Concerns are also growing about the smooth transition of power from incumbent U.S. President Donald Trump’s administration to that of President-elect Joe Biden, with the Trump administration recalcitrant to pass over the control of government, and thus hampering the Biden administration’s ability to handle ability to handle the COVID-19 situation and stimulate economic recovery. Some investors remained pessimistic about the dollar’s short-term prospects. The AUD held onto its overnight gains against the dollar after the Reserve Bank of Australia (RBA) released the minutes from its latest policy meeting. The minutes indicated that the RBA was ready to provide even more policy stimulus if necessary, in the wake of cutting interest rates to record lows during the meeting. The NZD/USD pair inched up 0.04% to 0.6905. The NZD was at its strongest in more than a year with investors easing bets for additional monetary easing. The pound saw gains over reports that the U.K. and the European Union could reach a Brexit divorce agreement by the beginning of the following week. U.S. retail sales and industrial production data is due later in the day, following China’s release of its own retail sales and industrial production data on Monday.