Rupee opened higher, Dollar lower vs. major currencies
Thursday,
11-Aug-2022
09:42 AM (IST)
The Indian rupee opened the day higher at 79.24/25 levels compared to its previous close at 79.52/53 levels as a decline in the U.S. inflation rate boosted Asian currencies, lifting risk appetite. Asian shares and currencies rose after U.S. headline inflation slowed more than expected, prompting traders to pare bets of aggressive policy tightening by the Federal Reserve. Indian government bond yields were trading largely unchanged on Thursday, as traders await local retail inflation data as well as fresh supply of debt through weekly auction, both due on Friday. Benchmark indices opened higher amid strong global sentiments. At 9.20 AM, the S&P BSE Sensex was trading at 59,397 up 580 point, while the broader Nifty50 was at 17,693 up 158 point. As per the technical indicators range for the USDINR pair may be 78.90-79.50 levels. Rupee has an immediate support at 79.42 levels. A breach of the same may see rupee at 79.56 followed by 79.76 levels. On the positive side rupee is likely to face resistance at 79.20 levels and if it is able to break the same then it may gain up to 79.04 levels followed by 78.84 levels.
The euro and Japanese yen were sitting pretty on Thursday morning after U.S. inflation data overnight came in less hot than feared and sent the dollar tumbling. U.S. consumer prices were unchanged in July compared with June, when prices rose a monthly 1.3%. The July result was lower than expectations due to a sharp drop in the cost of petrol, causing markets to reposition on hopes that inflation was peaking. If price rises have reached their zenith, investors expect the U.S. Federal Reserve will not have to maintain its eye-wateringly steep pace of interest rate hikes, which had been supporting the dollar. The euro was at $1.0281 on Thursday morning, after jumping 0.84% the day before, its biggest daily percentage gain since mid-June. The yen was at 133.24 per dollar, after the greenback had fallen 1.6% overnight on the Japanese currency, which is particularly sensitive to moves in U.S. yields. U.S. shares and short dated treasuries also rallied on the news, which pushed the Nasdaq more than 20% above its June low and the two-year treasury yield down to 3.2141%, seven basis points lower than its previous close. U.S. Treasuries were not trading in early Asia as due to a holiday in Japan. Analysts at Standard Chartered said the decline in the dollar seemed to be driven by improvements in investors’ attitude to riskier assets - other than the move against the yen, which they said was more of a yield play. Markets are currently pricing in a 57.5% chance of a 50 basis point interest rate rise at the Fed’s next meeting, according to the CME’s Fedwatch tool, though another 75 basis point increase remains possible. Fed policy makers were also warning in public remarks after the data that they would continue to tighten monetary policy until price pressures were fully broken.
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