Rupee opened lower, Dollar firm vs. major currencies

Tuesday,   06-Dec-2022   09:52 AM (IST)

The Indian rupee opened the day lower at 81.9350/9450 levels compared to its previous close at 81.79/80 levels  and slipped further to 82.34/35 levels in early deals after better-than-expected U.S. data rekindled worries on how high the Federal Reserve will hike rates. Asian currencies tumble. US Treasury yields and the dollar index rose. Indian government bond yields trading little changed as traders await RBI's monetary policy decision. The frontline indices opened lower following a decline in global stocks. At 9:22 AM, the S&P BSE Sensex was trading at 62,474 down 361 point, while the broader Nifty50 was at 18,602 down 99 point. As per the technical indicators range for the USDINR pair may be 81.80-82.40 levels. Rupee has an immediate support at 82.43 levels. A breach of the same may see rupee at 82.58 followed by 82.85 levels. On the positive side rupee is likely to face resistance at 81.90 levels and if it is able to break the same then it may gain up to 81.78 levels followed by 81.51 levels.

The U.S. dollar held firm against major peers on Tuesday, following its biggest rally in two weeks after strong services data in the United States fuelled bets the Federal Reserve may lift interest rates more than recently projected. The U.S. dollar index changed hands at 105.11 in early Asian trading, easing 0.1% after Monday's 0.7% rally, its biggest since Nov. 21. It had dipped to 104.1 for the first time since June 28 as traders continued to rein in bets of aggressive Fed tightening. However, it later reversed course as the Institute for Supply Management's (ISM) non-manufacturing PMI unexpectedly rose, indicating the services sector, which accounts for more than two-thirds of U.S. economic activity, remained resilient. The Federal Open Market Committee decides policy on Dec. 15. Traders currently expect a half-point hike to a 4.25-4.5% policy band and a terminal rate of just above 5% in May. U.S. long-term Treasury yields climbed the most since Oct. 20 overnight, sending the yield-sensitive dollar-yen pair 1.83% to as high as 136.835. Australia's central bank raised its cash rate 25 basis points to a 10-year high of 3.10% and reiterated that further policy tightening will be needed ahead, although policy was not on a pre-set path. Wrapping up its December policy meeting, the Reserve Bank of Australia (RBA) said the size and timing of future rate increases would be determined by incoming data and by the Board's assessment of the outlook for inflation and the labour market.