Rupee opened lower, Yen lower vs. Dollar

Friday,   12-Aug-2022   09:52 AM (IST)

The Indian rupee opened the day lower at 79.67/68 levels compared to its previous close at 79.6350/6450 levels as traders awaited the retail inflation data and eyed whether there will be any follow-through dollar demand. Data due later in the day expected to show India inflation rate eased in July, but remained above the Reserve Bank of India's (RBI) upper tolerance limit. Rise in Treasury yields and dollar index rebound weighed on rupee. Indian government bond yields were higher in early trades tracking a spike in U.S. Treasury yields, while further upside was expected to be capped ahead of bond auction and local retail inflation data due later. Indian shares edged lower as technology and automobile stocks declined amid weakness in other Asian markets. At 9.30 AM, the S&P BSE Sensex was trading at 59,127 down 206 point, while the broader Nifty50 was at 17,608 down 51 point. As per the technical indicators range for the USDINR pair may be 79.40-79.90 levels. Rupee has an immediate support at 79.72 levels. A breach of the same may see rupee at 79.89 followed by 80.03 levels. On the positive side rupee is likely to face resistance at 79.55 levels and if it is able to break the same then it may gain up to 79.41 levels followed by 79.28 levels.

The Japanese yen fell the most against a resurgent U.S. dollar on Friday, as a two-day rally in equities conceded to market expectations that the Fed will have to do a lot more to contain inflation. That realisation followed speeches and statements from a bunch of Federal Reserve officials warning investors against being sanguine after this week's slight softening in inflation numbers. The latest was San Francisco Fed President Mary Daly, who said on Thursday that a 50 basis point interest rate hike in September "makes sense" given recent economic data including on inflation, but that she is open to a bigger rate hike if data warrants. The Nasdaq and S&P 500 retreated on Thursday, despite fresh evidence of cooling inflation. The dollar index rose 0.1% to 105.210, with the euro down to $1.0311. The Japanese yen weakened to 133.49 per dollar, while sterling was last trading at $1.2184, down 0.23% on the day.  The euro rose 0.05% against the yen at 137.340. Even the kiwi, supported by expectations of a big rate rise in New Zealand next week, fell 0.16% versus the greenback to $0.643. Thursday's data showed U.S. producer prices (PPI) unexpectedly fell in July amid a drop in the cost of energy products. That followed Wednesday's surprise news that consumer prices (CPI) were unchanged in July due to a drop in gasoline prices. While that data caused a relief rally in markets fearing the Fed's super-charged tightening path, it was short-lived. Despite its recent bounce off mid-June lows, the tech-heavy Nasdaq is down about 18% so far this year. The dollar index is still up 10% this year, rising alongside the 225 basis points of Fed rate rises since March. Against the yen, it had fallen as far as 131.74 overnight, a one-week low, from Wednesday's 135.30 peak. It was back at 133.245 on Friday. US Treasury yields rose too, more at the longer end, causing the inverted yield curve to be less so.