Rupee opened slightly higher, Dollar rangebound vs. major currencies

Wednesday,   04-Sep-2024   10:00 AM (IST)

The Indian rupee opened the day slightly higher at 83.94/95 levels compared to its previous close at 83.9675/9775 levels on likely dollar sales by exporters. Likely RBI intervention and sharp fall in crude oil prices are also aiding rupee. However, rupee is under pressure amid a selloff in risk assets on concerns over the U.S. growth outlook. Indian government bond yields open marginally lower tracking a fall in U.S. Treasury yields, while major focus remains on jobs data in the world's largest economy, which will be the key driver for interest rate cuts. India's benchmark indexes opened lower dragged by information technology stocks and tracking a drop in Asian shares on resurgent worries over growth in the United States. At 9:26 AM, the S&P BSE Sensex was trading at 82,026 down 530 points, while the broader Nifty50 was at 25,111 down 169 points. As per the technical indicators range for the USDINR pair may be 83.80-84.00 levels. Rupee has an immediate support at 83.98 levels. A breach of the same may see rupee at 84.06 followed by 84.12 levels. On the positive side rupee is likely to face resistance at 83.90 levels and if it is able to break the same then it may gain up to 83.84 levels followed by 83.78 levels.

The dollar continues to trade within a range against its peers ahead U.S. non-farm payrolls report on Friday. Safe-haven Japanese yen rallied on Wednesday while riskier currencies like the Australian dollar and sterling languished as traders ran for cover following the worst sell-off in almost a month on Wall Street. The catalyst was ostensibly some soft U.S. manufacturing data, which fanned worries about a hard landing for the world's biggest economy, with traders already nervous ahead of crucial monthly payrolls data on Friday. The yen was about 0.3% stronger at 145.02 per dollar as of 0047 GMT, following a 1% rally overnight against a broadly stronger dollar. The dollar-yen pair tends to track long-term U.S. Treasury yields, which dropped nearly 7 basis points (bps) overnight and continued to decline in Asian hours to stand at 3.8329%, with investors flocking to the safety of bonds. The dollar, though, was firm against most other major peers, as it tends to draw safety flows even when the U.S. economy is the locus of concern. Risks to the U.S. soft-landing scenario - which had been gaining traction recently in markets - saw traders raise odds of a 50 basis point (bp) Federal Reserve interest rate cut on Sept. 18 to 38% from 30% a day earlier, according to the CME Group's FedWatch Tool. Economists surveyed by Reuters expect Friday's report to show an increase of 165,000 U.S. jobs in August, up from a rise of 114,000 in July. Ahead of that, investors will keep a close eye on job openings data on Wednesday and the jobless claims report on Thursday. U.S. markets had been closed for the Labor Day holiday on Monday and came back Tuesday to a weak Institute for Supply Management (ISM) survey that suggested factory activity in the country would remain subdued for a while.