Rupee trading higher, Euro lower Vs dollar

Friday,   19-Oct-2018   12:32 PM (IST)

The Indian rupee is trading higher against the dollar in afternoon trade and is currently trading at 73.48/49 levels (12:20 pm). Rupee opened at 73.60/61 levels today and moved lower to 73.65/66, before resuming its gains as a decline in Brent crude oil prices offsets hawkish minutes of the Federal Reserve that lifted U.S. Treasury yields. Bunched-up inflows after yesterday’s holiday also supported the rupee. Most Asian currencies traded flat to lower against the dollar. Indian government bonds rose in early trade tracking an overnight slump in crude oil prices that aided demand for bonds ahead of a weekly auction today. Indian benchmark indices dropped for a second straight session on Friday; with index heavyweight Reliance Industries Ltd sliding as much as 7 percent after the company’s gross refining margin hit a three-and-a-half year low. As per the technical indicators range for the USDINR pair may be 73.10- 73.65 levels. Rupee has an immediate support at 73.68 levels. A breach of the same may see rupee at 73.85 followed by 74.04 levels. On the positive side rupee is likely to face resistance at 73.42 levels and if it is able to break the same then it may gain up to 73.26 levels followed by 73.10 levels. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.58%, 4.39% and 4.32% respectively.

The US dollar remained strong against the Euro following FOMC minutes and strong US data. Also, the risk aversion environment favored the demand for the US dollar even as US yields moved lower. Regarding the euro, concerns about Italy have re-emerged around the EU summit. The European Affairs Minister Moscovici mentioned that they must handle budget disagreement with Italy with intelligence and a cool head while Italy's economy minister Giovanni Tria said he hopes they can narrow differences regarding the budget. The Yuan is trading little changed after weakening to 6.94 against the dollar today after official data showed China’s third quarter GDP growth slowed more than expected. China’s economic growth slowed to 6.5% year-on-year, compared with the general consensus of a 6.6% growth. It was the weakest pace since the first quarter of 2009. On a quarterly basis, GDP grew 1.6% in the third quarter, in line with expectations but slower than the 1.8% growth in April-June. Reports said Beijing’s official growth target for 2018 is around 6.5%. Earlier in the day, the chief of China’s CSRC said that Beijing will extend its support to non-state backed listed companies, while the PBOC governor said low market valuations and market volatility are mainly due to investor sentiment, rather than China’s economic fundamentals.