Rupee opened higher, Dollar lower vs. Euro

Thursday,   29-Jun-2017   09:10 AM (IST)

The Indian rupee opened the day higher at 64.46/47 levels compared to its previous close at 64.55/56 levels as hints by policymakers of tighter monetary policy in Europe weighs on dollar. Benchmark indices saw a positive start in line with Asian Markets after Wall Street ended higher in overnight trade ahead of the June F&O expiry. Indian government bonds drop further as U.S. Treasury yields extend gains, while RBI announces surprise supply of notes. As per the technical indicators range for the USDINR pair may be 64.25-64.65 levels. Rupee has an immediate support at 64.57 levels. A breach of the same may see rupee at 64.65 followed by 64.73 levels. On the positive side rupee is likely to face resistance at 64.42 levels and if it is able to break the same then it may gain up to 64.31 levels followed by 64.22 levels.

The dollar wallowed close to one-year lows against the euro and slipped against sterling in Asian trading on Thursday, as investors priced in tighter monetary policy in Europe. The dollar index, which tracks the greenback against a basket of six major rival currencies, was steady on the day at 96.019, but well below highs above 97.0 hit earlier this week. Sterling added to gains made after Bank of England Governor Mark Carney said on Wednesday that the central bank is likely to need to raise interest rates as the British economy comes closer to operating at full capacity. European Central Bank President Mario Draghi sparked the euro's rally on Tuesday, when he hinted that the ECB could trim its stimulus this year. The Federal Reserve hiked interest rates this month and left the door open for further increases later in the year, though a batch of mixed economic data recently has given investors' pause as to whether the Fed would be able to stay on its planned tightening path. The euro was slightly higher on the day at $1.13795 after scaling a peak of $1.13915 on Wednesday, despite evidence that positioning for a dramatic stimulus scale-back might have been overdone. Draghi's remarks were intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening, and set up September as the earliest the bank would discuss rolling back stimulus, according to sources familiar with the ECB chief's thinking. The pound was up 0.1 percent at $1.2940 after spiking to $1.2971 on Wednesday, it’s highest since June 9. The BoE's Monetary Policy Committee were split 5-3 earlier this month on whether to raise British interest rates from their record-low 0.25 percent. By contrast, Bank of Japan policy members believed their best approach would be maintaining their current ultra-loose policy, with inflation well shy of their 2 percent target, according to a summary of the BOJ's latest meeting released on Monday.