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Rupee opened lower, Dollar lower vs. major currencies

Friday,   14-Jan-2022   10:34 AM (IST)

The Indian rupee opened the day lower at 74.0450/0550 levels compared to its previous close at 73.88/89 levels as more Fed officials indicate support for rate hike at March meeting. India federal government bond yields trading largely unchanged ahead of weekly debt auction, which includes sale of new 10-year bond. Indian shares snapped five sessions of gains and inched lower early on Friday dragged by losses across the board, while global investor sentiment soured after fresh hawkish comments from U.S. Federal Reserve officials cemented expectations of tighter monetary conditions. At 10:18 AM, the S&P BSE Sensex was trading at 61,048 down 188 point, while the broader Nifty50 was at 18,210 down 48 point. As per the technical indicators range for the USDINR pair may be 73.85-74.25 levels. Rupee has an immediate support at 74.12 levels. A breach of the same may see rupee at 74.27 followed by 74.38 levels. On the positive side rupee is likely to face resistance at 73.98 levels and if it is able to break the same then it may gain up to 73.86 levels followed by 73.75 levels.

The dollar headed for its largest weekly fall in eight months on Friday as investors trimmed long positions and deemed, for now, that several U.S. rate hikes this year are fully priced in. In a week where data showed U.S. inflation at its hottest since the early 1980s, selling has forced the greenback through key support against the euro in particular and traders seem content to lighten their bets until a clearer trend emerges. The dollar index is down about 0.9% for the week, on course for its largest weekly percentage fall since last May and set to halt a rally that has lasted about six months. The index last held at 94.849 in quiet Asia trade. The euro is up more than 0.8% for the week so far, and has punched out of a range it held since late November. At $1.1457 it doesn't face strong chart resistance until $1.1525. The yen has rallied 1% over the week, and pushed back through 115 to the dollar, last holding at 114.13. The moves have come while U.S. interest rate futures have all but locked in four hikes this year. But longer-end yields have fallen slightly on hawkish comments from Federal Reserve officials about reducing the bank's balance sheet. The Antipodean currencies have also been roused from their ranges and will have traders looking closely at labour and inflation data in both countries this month for anything that might prompt further shifts in central bank rhetoric. The New Zealand dollar is up 1.3% for the week so far and is above its 50-day moving average at $0.6861. The Aussie briefly broke above stubborn resistance around $0.7276 this week, but retreated to that level on Friday. Sterling has been forging ahead, too, defying a political crisis threatening Prime Minister Boris Johnson's position on confidence that Britain's economy can withstand a wave of COVID-19 infections and that rate hikes could begin next month. The pound traded above its 200-day moving average on Thursday and is heading for a fourth consecutive weekly gain of more than 0.5%. It last bought $1.3707. In Asia on Friday the Bank of Korea raised its benchmark interest rate by 25 basis points to 1.25%, as expected, and the South Korean won looked to hang on to a weekly rise of about 0.8%. China's yuan , on the other hand, has had its gains on the dollar capped by growing expectations of policy easing to soften the landing of a slowing economy. Trade data is due around 0200 GMT. Other notable moves in overnight trade included the Canadian dollar's retreat from a two-month high as oil prices eased and a rise in the safe-haven Swiss franc to a ten-week peak of 0.9093 per dollar.