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Rupee opened lower, Dollar up vs. major currencies

Friday,   08-Jan-2021   10:35 AM (IST)

The Indian rupee opened the day lower at 73.39/40 levels compared to its previous close at 73.3250/3350 levels as Treasury yields continue to climb, lifting dollar. India's federal government bond yields trading lower, as the central bank announced purchase of benchmark bond in next week’s special open market operation. Equity markets made a strong start to Friday's session, with the Nifty50 index and the MidCap index hitting their fresh record high levels, on the back of firm global cues. At 10:08 AM, the S&P BSE Sensex was trading at 48,417, up 323 point, while the broader Nifty50 was at 14,242 up 105 points. As per the technical indicators range for the USDINR pair may be 73.15-73.55 levels. Rupee has an immediate support at 73.44 levels. A breach of the same may see rupee at 73.55 followed by 73.73 levels. On the positive side rupee is likely to face resistance at 73.23 levels and if it is able to break the same then it may gain up to 73.08 levels followed by 72.98 levels.

The dollar was up on Friday morning in Asia, holding onto the biggest gains in over two months as a rise in U.S. Treasury yields led to some unwinding of bearish bets on the U.S. currency. The market avoided big moves as investors finish the week. The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.14% to 89.907. The dollar rose above the almost thee-year low of 89.206 seen on Wednesday, as investors took profits against the euro particularly. The index slid almost 7% in 2020, and as much as 0.9% in 2021 to date, over expectations of U.S. stimulus measures. The benchmark 10-year Treasury yield topped 1% on Wednesday for the first time since March 2020, and the euro was at $1.22685 following a 0.5% drop seen on Thursday. The rising yields and dollar prompted caution in some investors. The USD/JPY pair inched up 0.08% to 103.88, with Japan’s greater Tokyo area entering a state of emergency on Thursday. Prime Minister Yoshihide Suga said earlier in the day that the government would liaise with other prefectures to see whether the state of emergency should be extended, with the Osaka and Aichi governors expected to request that the two areas be added to the emergency declaration. The AUD/USD pair edged down 0.19% to 0.7753, with Australia’s third-largest city of Brisbane entering a three-day lockdown from later in the day. However, Jon Ossoff and Raphael Warnock’s victory in the U.S. Senate runoff elections in Georgia earlier in the week are expected to be negative for both bonds and the dollar. The pair’s sweep of the two available seats gives the Democrats a Senate majority, in turn giving President-elect Joe Biden scope to push through more fiscal stimulus when his administration takes office on Jan. 20. On the data front, the U.S. will release employment data, including non-farm payrolls, later in the day. The data is expected to give investors clues to the need for more stimulus measures to keep the economic recovery going.