Rupee opened higher, Dollar lower vs. major currencies

Wednesday,   15-May-2024   09:57 AM (IST)

The Indian rupee opened the day higher at 83.4925/5025 levels compared to its previous close at 83.51/52 levels due to a decline in U.S. Treasury yields ahead of the key U.S. inflation data that will provide cues on the Federal Reserve's interest rate path this year. Indian government bond yields dip in early session today tracking a similar move in U.S. Treasury yields. Indian shares opened higher helped by gains in drugmaker Cipla after a report of the promoter group's stake sale plan, while lender Canara Bank jumped on its inclusion into a key MSCI index among twelve others, post its quarterly rejig. At 9:17 AM, the S&P BSE Sensex was trading at 73,178 up 73 points, while the broader Nifty50 was at 22,256 up 38 points. As per the technical indicators range for the USDINR pair may be 83.40-83.60 levels. Rupee has an immediate support at 83.53 levels. A breach of the same may see rupee at 83.58 followed by 83.65 levels. On the positive side rupee is likely to face resistance at 83.45 levels and if it is able to break the same then it may gain up to 83.40 levels followed by 83.37 levels.

The dollar traded near a one-month low versus the euro on Wednesday amid lower Treasury yields as traders braced for a key U.S. inflation report later in the day that could dictate the path of Federal Reserve policy. The yen languished near a two-week low, as a still-gaping yield gap between local bonds and U.S. peers continued to encourage selling of the Japanese currency. The yuan slid to a two-week low versus the dollar after U.S. President Joe Biden unveiled steep tariff increases on an array of Chinese imports, including computer chips, fomenting tensions with Beijing. The benchmark long-term U.S. Treasury yield was little changed at 4.4472% after a 3 1/2-basis point (bp) retreat overnight. Wednesday's report on core consumer prices is expected to show CPI rose 0.3% month-on-month in April, down from a 0.4% growth the previous month, according to a Reuters poll. Fed Chair Jerome Powell gave a bullish assessment on Tuesday of where the U.S. economy stands, with an outlook for continued above-trend growth and confidence in falling inflation that, while eroded by recent data, remains largely intact. Higher-than-expected consumer prices in the first quarter of the year were the driving force for a sharp repricing of the pace of Fed rate cuts, with those bets now pared back to about 45 bps of reductions this year. Despite broad dollar weakness overnight against the majority of its peers, it continued to climb against the yen. The dollar added 0.06% to 156.535 yen on Wednesday, after pushing as high as 156.80 overnight. In contrast to U.S. counterparts, Japanese long-term yields stand at just 0.96%, even with Bank of Japan rhetoric turning more hawkish in recent days and prospects for another rate hike in June increasing. The dollar's surge to a 34-year peak of 160.245 yen on April 29 triggered two rounds of aggressive yen buying that traders and analysts suspect was the work of the BOJ and Japanese finance ministry. The dollar stood at 7.2409 yuan in offshore trading, after sliding to the lowest since May 1 at 7.2460 overnight. The Biden administration slapped China with steep tariff increases on products including chips, electric vehicle batteries and medical equipment, immediately spurring Beijing to vow retaliation.