Rupee opened marginally higher, Dollar flat vs. major currencies

Wednesday,   16-Jun-2021   10:47 AM (IST)

The Indian rupee opened the day marginally higher at 73.29/30 levels compared to its previous close at 73.3125/3225 levels ahead of the Federal Reserve meeting outcome where the forecasts for inflation, unemployment, and the likely path of interest rates will be watched. Asian shares and currencies mostly lower. Indian federal government bond yields rose tracking Brent crude oil, following domestic inflation spike. Indian shares retreated from recent record highs on Wednesday, weighed down by heavyweight Reliance Industries and financial stocks, with investors awaiting the U.S. Federal Reserve's policy statement due later in the day. At 10:35 AM, the S&P BSE Sensex was trading at 52,623 down 150 point, while the broader Nifty50 was at 15,812 down 57 point. As per the technical indicators range for the USDINR pair may be 73.00-73.50 levels. Rupee has an immediate support at 73.38 levels. A breach of the same may see rupee at 73.46 followed by 73.54 levels. On the positive side rupee is likely to face resistance at 73.20 levels and if it is able to break the same then it may gain up to 73.11 levels followed by 72.95 levels.

The dollar held near a one-month high against a basket of currencies on Wednesday as investors tried to ascertain if the Federal Reserve might alter the language on its stimulus following a recent jump in U.S. inflation. The dollar index stood at 90.528, having hit a one-month high of 90.677 on Tuesday despite mixed U.S. economic data. U.S. retail sales dropped more than expected in May but sales in April were revised sharply up and are way above their pre-pandemic level. With spending rotating back to services from goods as vaccinations allow Americans to travel and engage in other activities, the data cemented the perception of a strong recovery in the economy. Separate data showed wholesale price inflation accelerated to 6.6%, the largest gain since November 2010. The Federal Reserve is widely expected to acknowledge the first conversations among its policymakers about when and how fast to pare back the massive bond-buying program launched in 2020 when it concludes a policy meeting later in the day. Yet most investors think the Fed will refrain from any hints of starting tapering its stimulus in the near future. Some market players also noted the dollar could rise by default as other major currencies appear to be losing momentum. The euro stood at $1.2126, little changed on the day but struggling to recover from its fall last week after the European Central Bank pledged to keep stimulus steady over the summer. The yen was flat at 110.08 yen per dollar, near its two-month low of 110.325 touched earlier this month, with the Bank of Japan expected to extend some of its pandemic relief measures this week. The British pound, a strong performer so far this year, hit a one-month low of $1.4035 on Tuesday despite stronger-than-expected employment data. It last stood at $1.4085. The number of employees on British company payrolls surged by a record amount in May while pay growth marked its biggest rise since 2007 in April although statisticians warned that this was distorted by comparisons with depressed wages a year ago and greater job losses among low-paid staff. While UK job recovery looks set to continue as the economy reopens, the rapid spread of the highly contagious Delta variant of the novel coronavirus, which forced Prime Minister Boris Johnson to delay his plans to lift lockdown, is seen as a risk. The Australian dollar lacked traction after the country’s central bank signalled on Tuesday its willingness to extend its bond purchase programme next month. The currency changed hands at $0.7685, not far from a seven-week low of $0.7646 touched earlier this month. In crypto markets, bitcoin traded at $40,305, having hit a near one-month high of $41,341 on Tuesday, aided by the promise of fresh investment from major backer MicroStrategy and an upbeat tweet from Tesla boss Elon Musk. Ether had less momentum, at $2,561.