Rupee opened lower, Dollar up vs. major currencies

Thursday,   14-Jan-2021   10:47 AM (IST)

The Indian rupee opened the day lower at 73.19/20 levels compared to its previous close at 73.1450/1550 levels but moved up to 73.13/14 levels in early deals. Traders await details of Biden’s fiscal stimulus package. India's government bond yields largely unchanged as traders await outcome of RBI’s special open market operation today. Indian shares inched lower on Thursday, weighed down by Infosys as investors locked in some gains after the heavy weight posted December-quarter results, while they waited for more details on a major stimulus package in the United States. At 10:10 AM, the S&P BSE Sensex was trading at 49,316 down 176 point, while the broader Nifty50 was at 14,517 down 48 point. As per the technical indicators range for the USDINR pair may be 72.95-73.35 levels. Rupee has an immediate support at 73.23 levels. A breach of the same may see rupee at 73.34 followed by 73.42 levels. On the positive side rupee is likely to face resistance at 73.07 levels and if it is able to break the same then it may gain up to 72.95 levels followed by 72.82 levels.

The dollar was up on Thursday morning in Asia, continuing a rebound from near three-year lows against major peers as investors await U.S. President-elect Joe Biden’s plans for further stimulus measures. The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.04% to 90.373. The index was little changed on Thursday after adding 0.3% during the previous session. It fell to as low as 89.206 for the first time since March 2018 on Jan. 6. Chinese trade data released earlier in the day outperformed, with exports growing 18.1% year-on-year, imports growing 6.5% year-on-year and the trade balance at $78.17 billion in December. Biden is scheduled to unveil plans for “trillions” of dollars in further COVID-19 stimulus measures later in the day. Investor expectancy that the measures will lead to faster economic recovery lifted U.S. Treasury yields, in turn giving the greenback a boost. Investors continued to unwind bearish bets, which also helped the U.S. currency hold onto gains made on Wednesday. The prospect of more stimulus measures weighed in on U.S. government bonds and saw the benchmark Treasury yield top 1% for the first time since March 2020, in turn leading the dollar to gains in four of the past five trading sessions. Bitcoin held onto its 10% gains from Wednesday, rallying after a slide of almost $12,000 from its all-time high of $42,000 seen during the previous week. The digital currency was 0.6% higher at $37,655 on Thursday, climbing up from the low of $30,261.13 seen on Jan. 11. However, some investors were cautious and warned that the dollar’s bounce could be temporary, as a build-up of bearish positions are unwound. FOREX speculators have been net short the dollar since March 2020 as a surge in investors’ appetite for riskier assets turned them away from the dollar. More stimulus will also support risk sentiment in the long term, further dampening demand for the safe-haven dollar.