Rupee opened higher, Yen steady vs. Dollar

Wednesday,   01-Dec-2021   10:38 AM (IST)

The Indian rupee opened the day higher at 74.9550/9650 levels compared to its previous close at 75.16/17 levels tracking recovery in Asian shares despite likelihood of Fed increasing taper pace at this month’s meeting. India’s federal government bond yields trading higher, after strong economic growth data cemented bets that the rate-setting panel may go ahead with policy normalization. Indian shares rose over 1% on Wednesday, boosted by metals, auto and banking stocks, after growth data showed India grew at a faster pace than any major economy in the September quarter. At 10:18 AM, the S&P BSE Sensex was trading at 57,492 up 427 point, while the broader Nifty50 was at 17,109 up 126 point. As per the technical indicators range for the USDINR pair may be 74.70- 75.30 levels. Rupee has an immediate support at 75.02 levels. A breach of the same may see rupee at 75.23 followed by 75.39 levels. On the positive side rupee is likely to face resistance at 74.84 levels and if it is able to break the same then it may gain up to 74.69 levels followed by 74.53 levels.

The safe-haven yen held steady on Wednesday, while the risk-sensitive Australian dollar languished near a one-year low after Federal Reserve Chair Jerome Powell signalled a faster taper of stimulus despite the risks around the Omicron COVID-19 variant. Investors fear that hasty monetary tightening could choke off the nascent economic recovery, with little still known about Omicron's potential to evade current vaccine protection or how deadly it might be. Global markets fell sharply on Tuesday after the head of drugmaker Moderna said existing COVID-19 vaccines would be less effective against the new variant, although BioNTech's chief executive struck a cautiously positive note, saying the vaccine it makes with Pfizer would likely offer strong protection against severe disease from Omicron. The Aussie weakened 0.12% to $0.71245 after dipping as low as $0.7063 of Tuesday for the first time since Nov. 3, 2020. The New Zealand dollar was largely flat at $0.68195 after also touching the lowest since early November of last year at $0.6773 in the previous session. The greenback ticked 0.09% higher to 113.26 yen, but still within sight of an overnight low of 112.535, a level not seen since Oct. 11. Powell said in testimony to Congress on Tuesday that Fed officials will discuss at their Dec. 14-15 policy meeting whether to end bond purchases a few months earlier than had been anticipated. The Fed chief finally did an about face on a long-held contention that inflation would be "transitory." Powell expressed confidence that the impact from Omicron will be far less than in the spring of 2020, when the pandemic erupted. In response, traders wound up interest rate hike expectations, with money markets now almost fully priced for tightening at the June meeting. Powell's testimony continues later Wednesday. The index, which measures the dollar against six major peers, traded at 95.921 after sliding to 95.544 on Tuesday for the first time since Nov. 18, weighed down largely by an unwinding of bearish bets on the euro, the most heavily weighted component in the basket. Westpac recommends buying dips in the index down to the mid-95 level. The single currency slipped 0.04% to $1.1331, down from a two-week high of $1.1387 overnight. Sterling traded not far from an 11-month low of $1.31945 reached overnight, last changing hands at $1.32955.