Rupee opened lower, Dollar up vs. major currencies

Monday,   11-Jan-2021   10:45 AM (IST)

The Indian rupee opened the day lower at 73.47/48 levels compared to its previous close at 73.24/25 levels as disappointing US jobs report increases probability of more fiscal stimulus, lifting US yields and dollar. India's federal government bond yields jump, with benchmark yield at over two-week high, after central bank’s reverse repo announcement and consistent rise in U.S. yields. The equity markets scaled fresh record highs on Monday, with the S&P BSE Sensex scaling Mount 49,000 for the first time ever, on the back of favourable global cues. At 10:05 AM, the S&P BSE Sensex was trading at 49,205, up 422 point, while the broader Nifty50 was at 14,466 up 118 points. As per the technical indicators range for the USDINR pair may be 73.15-73.55 levels. Rupee has an immediate support at 73.47 levels. A breach of the same may see rupee at 73.58 followed by 73.70 levels. On the positive side rupee is likely to face resistance at 73.24 levels and if it is able to break the same then it may gain up to 73.12 levels followed by 73.01 levels.

The dollar was up on Monday morning in Asia, continuing a rebound over big gains in U.S. yields and hopes for more U.S. stimulus measures that saw some investors tempering bearish bets and seeing the dollar move further away from the multi-year lows seen recently. The U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.41% to 90.388, climbing above the 90 mark. The dollar’s gain was the risk-sensitive Antipodean currencies’ loss, with even a second month of better-than-expected data in Australia failing to lift the AUD up. November’s retail sales were up 7.1% month-on-month, higher than October’s 7% reading. The USD/CNY pair was up 0.22% to 6.4890. Data released earlier in the day showed that the producer price index (PPI) contracted 0.4% year-on-year in December, higher than the -0.8% in forecasts prepared by Investing.com and November’s -1.5% reading. The data also showed that December’s consumer price index (CPI) also beat expectations, rising 0.7% month-on-month and 0.2% year-on-year. Further Chinese data, including exports, imports and trade balance data, is due later in the week. Data from the U.S., including the PPI and retail sales, is also due later in the week. The GBP/USD pair gained 0.40% to 1.3508. U.S. President-elect Joe Biden has promised “trillions” in extra COVID-19 relief spending as he and a Democrat-controlled Congress prepare to take office on Jan. 20. Biden’s promise pushed the yield on the benchmark 10-year U.S. debt up more than 20 basis points to 1.1187% in 2021 to date, in turn helping the dollar to a one-month high of 104.095 yen earlier in the day, with better rates giving pause to some dollar shorts. However, a crowded trade in bets against the dollar, alongside the selloff in the bond market since the Democrats won control of the Senate during the previous week’s runoff elections in Georgia, has slowed the greenback’s steep and steady decline since March 2020.