Rupee opened higher, Dollar lower vs. major currencies

Wednesday,   19-Dec-2018   09:08 AM (IST)

The Indian rupee opened the day higher at 70.10/11 levels compared to its previous close at 70.44/45 levels as Brent crude extends recent rout to slump to lowest in 14-months. After touching the high of 69.85/86 levels in early deals, rupee trimmed the gains to touch the low of 70.21/22 levels on suspected RBI dollar buying. Oversupply concerns and global growth worries have prompted Brent to lose one-third of its value this quarter. Brent is up at $56.50 in early Asia trading. Benchmark indices opened higher on Wednesday amid mixed Asian cues and the ongoing Federal Open Market Committee (FOMC) meeting. At 9:35 AM, the S&P BSE Sensex was trading at 36,436, up 89 points, while the broader Nifty50 was ruling at 10,948, up 39 points. Indian government bonds jump in early session, with 10-year benchmark yield slumping below 7.25% for the first time in eight months as RBI ups OMO purchase quantum for next few weeks. As per the technical indicators range for the USDINR pair may be 69.60-70.40 levels. Rupee has an immediate support at 70.20 levels. A breach of the same may see rupee at 70.40 followed by 70.74 levels. On the positive side rupee is likely to face resistance at 69.80 levels and if it is able to break the same then it may gain up to 69.65 levels followed by 69.30 levels.

The dollar languished close to one-week lows on Wednesday as investors wagered the Federal Reserve would slow the pace of U.S. monetary tightening after its keenly-watched policy meeting later in the day. The safe-haven yen and the Swiss franc held a firm tone in early Asian trade as an overnight plunge in oil prices provided yet another reminder of the deteriorating global growth prospects, and underscored why traders expect the Fed will likely be done after an expected rate hike this week. The yen and the Swiss franc were well bid at 112.37 and 0.9916 respectively, after posting three consecutive days of gains. Risk sentiment has been scarred by weaker-than-expected economic data out of China and the eurozone, while the Sino-U.S. trade dispute and a collapse in oil prices have added to fears the global economy is fast losing momentum. In Asia, markets are looking to China’s three day Central Economic Working Conference (CEWC) meeting that starts on Wednesday for Beijing's growth and reform objectives. A steady downturn in China's economy this year has been one of the key drivers of asset markets, including currencies, over recent months. The dollar index was down 0.2 percent at 96.9, extending losses into the second day. The U.S. currency has also been pressured by a fall in the U.S. 10-year treasury yield, which has slipped by around 10 basis points in the last three days. Nervous anticipation was palpable in global markets as they awaited the Fed's decision later in the day, especially for its policy guidance for 2019 after what is expected to be its fourth rate hike for this year. While the U.S. central bank's latest median dot plot projections from September indicated three more hikes in 2019, the rate futures market is pricing in only one more rate hike for 2019 - a shift that underscored growing signs of stress on the global economy that many believe will eventually crimp U.S. growth.