Rupee trading higher, Yen lifted by Asia risk-off

Tuesday,   18-Dec-2018   12:22 PM (IST)

The Indian rupee is trading higher at 71.1825/1925 levels (12:05 pm) in the afternoon deals after touching the high of 71.1675/1775 levels as lower crude oil prices and weak U.S. economic data outweighed broad sell-off in global equities amid caution ahead of the Federal Reserve’s policy meet that starts today. So far rupee traded in the range of 71.1675 to 71.35 levels. Equity benchmarks have continued to trade lower, with the Nifty trading just below 10,840. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 70.70-71.50 levels. Rupee has an immediate support at 71.30 levels. A breach of the same may see rupee at 71.42 followed by 71.48 and 71.55 levels. On the positive side rupee is likely to face resistance at 71.12 levels and if it is able to break the same then it may gain up to 71.05 levels followed by 70.93 and 70.82 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 4.09%, 3.77% and 3.91% respectively.

Risk sentiment remained softer in Tuesday’s Asian trading session, propping up the safe-haven demand for the Yen versus its American counterpart that knocked-off USD/JPY to the 112.50 level, despite Japan’s downward revision to its GDP growth forecasts. The Kiwi was lifted by upbeat New Zealand’s business confidence numbers, having regained the 0.6850 barrier while the Aussie’s upside was capped by the 0.72 handle, as the RBA minutes failed to impress the bulls. Both the Euro and pound traded modestly flat, as the US dollar picked up some strength heading towards a Fed rate hike due tomorrow. Among the related markets, the Asian equities slipped, led by a 1.5% drop in the Japanese benchmark index, the Nikkei 225. Meanwhile, both crude benchmarks were sold-off into mounting global growth concerns, with WTI down -2.20% testing the 49.00 support. Gold prices on Comex eased-off four-day tops of 1252.95, but keeps 1250 level amid softer Treasury yields. Markets brace for the Swiss Govt (SECO) economic forecasts due to published at 0645 GMT while the European markets will see the German IFO survey for December. The headline business climate index is likely to deteriorate further to 101.7 versus 102.0 previous. The UK docket remains absolutely data-dry, as the Brexit-related headlines will continue to drive the GBP markets.