Rupee inches lower, EURUSD up

Friday,   11-Oct-2019   12:23 PM (IST)

The Indian rupee slipped lower and is currently trading at 71.01/02 levels (12:15 pm) in the afternoon deals after touching the low of 71.0325/0425 levels on dollar buying in the market. Rupee touched the high of 70.80/81 levels early today as hopes of a trade deal between the U.S. and China boosted Asian currencies and equities. Benchmark indices trim gains. At 12:12 PM, the S&P BSE Sensex was trading at 37,936, up 56 points, while the broader Nifty50 was at 11,244, up 10 points. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 70.60-71.15 levels. Rupee has an immediate support at 71.10 levels. A breach of the same may see rupee at 71.18 followed by 71.33 and 71.49 levels. On the positive side rupee is likely to face resistance at 70.87 levels and if it is able to break the same then it may gain up to 70.72 levels followed by 70.64 and 70.56 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 3.47%, 3.69% and 4.94% respectively.

Hopes of progress in the US-China trade talks kept the safe-haven Japanese yen on the defensive and continued benefitting trade-sensitive Australian and the New Zealand Dollar. The British Pound remained well supported by renewed Brexit optimism and the prevalent US Dollar selling bias provided a modest lift to the shared currency during the Asian session on the last trading day of the week. The US President Donald Trump on Thursday characterized the first day of trade talks between the top US and Chinese negotiators as very good and said that he is planning to meet Chinese Vice Premier Liu He on Friday. Adding to this, a White House official said that the talks had gone probably better than expected and raised the possibility of a currency agreement, as a part of partial trade deal this week. Meanwhile, the Sterling was the best-performing major currency on Thursday and posted its largest daily percentage gains since March after Irish Prime Minister Leo Varadkar said that a Brexit deal could be clinched by the end of October. Varadkar said that they have identified a potential path forward on the Irish border issue and how to avoid a hard border, paving the way for the resumption of EU-UK Brexit talks on Friday. On the other hand, the Greenback failed to capitalize on the positive trade-related developments and remained depressed amid increasing odds of further monetary easing by the Fed. Thursday's softer US consumer inflation figures reinforced market expectations that the Fed will cut interest rates again at its upcoming meeting on October 29-30 and kept exerting some downward pressure on the buck.