Rupee opened higher, Dollar higher vs. major currencies

Tuesday,   07-Dec-2021   10:45 AM (IST)

The Indian rupee opened the day higher at 75.31/32 levels compared to its previous close at 75.42/43 levels tracking broad recovery in Asian shares and currencies after China takes measures to boost economy. China central bank cuts amount of cash banks must hold as reserves by 50 basis points and nation’s top decision-making body calls for stabilizing growth, housing in 2022. India’s federal government bond yields jump, with 10-year yield at five-week high, tracking U.S. Treasury rates and oil prices. Indian shares bounced back on Tuesday from a more than three-month closing low, aided by gains in metal and banking stocks, as concerns about the Omicron coronavirus variant eased. At 10:26 AM, the S&P BSE Sensex was trading at 57,378 up 631 point, while the broader Nifty50 was at 17,094 up 182 point. As per the technical indicators range for the USDINR pair may be 75.00-75.50 levels. Rupee has an immediate support at 75.40 levels. A breach of the same may see rupee at 75.52 followed by 75.65 levels. On the positive side rupee is likely to face resistance at 75.22 levels and if it is able to break the same then it may gain up to 75.08 levels followed by 74.96 levels.

The dollar was supported against safe-haven currencies such as the Japanese yen on Tuesday, hanging on to an overnight jump made with U.S. yields as investors hoped early signs the Omicron variant may be mild will be proved correct. The yen nursed a 0.6% overnight drop, its largest in two weeks, at 113.47 per dollar. The Swiss franc, another safe-haven currency, suffered its largest one-day percentage fall in nearly three months on Monday. Dropping through its 200-day and 50-day averages to 0.9255 per dollar. Early observations in South Africa suggest those infected suffer relatively minor symptoms compared with previous virus waves. Anthony Fauci, the top U.S. infectious disease official, also said it doesn't seem too severe. Pressure on the euro has resumed as bets firm on higher U.S. interest rates and it fell about 0.2% on Monday to leave it at $1.1283 in early Asia trade. Fed funds futures have priced in more than two full rate hikes next year, beginning in May and overnight U.S. yields rose along the curve lifting 10-year rates 7.6 basis points and back above 1.4%. China, facing a slowing economy, is going in the opposite direction and eased policy overnight with a second cut this year in banks' reserve requirements - though that only seemed to buttress the positive mood and the Yuan was steady. Sterling and the kiwi are the outliers and mostly missed out on a bounce. Sterling last sat at $1.3259, not far above last week's 11-month trough of $1.3194 while the kiwi traded at a one-year low of $0.6740 on Tuesday. Speculators are short sterling and Omicron's emergence has added to bets that the Bank of England holds fire on hiking rates at next week's meeting. By contrast rates are already on the up in New Zealand, but the market seems to figure that's bad for growth. Australia's central bank left interest rates at a super-loose 0.1% on Tuesday and stuck with its bond buying plans, resisting pressure to follow its U.S. counterpart in signaling an earlier winding down of stimulus. Wrapping up the last policy meeting of the year, the Reserve Bank of Australia's (RBA) Board noted the emergence of the Omicron variant, but was confident it would not derail what has been a rapid economic recovery.