Rupee opened lower, Dollar firm vs. major currencies

Monday,   09-Dec-2019   09:03 AM (IST)

The Indian rupee opened the day lower at 71.29/30 levels compared to its previous close at 71.19/20 levels after dollar index rises by most in a month following robust US jobs report. Yuan falls after China November exports unexpectedly decline. Brent crude is down 0.3% at $64.18 after reaching more than two-month highs on Friday. OPEC and allies agree to reduce oil supplies by additional 500,000 barrels per day beginning next month. Indian government bonds continue to fall as sentiment negative after spike in crude oil prices and fiscal worries continue to hurt. Benchmark indices were trading flat with a negative bias today, with banking stocks being the top drags. At 9:20 AM, the S&P BSE Sensex was trading at 40,402, down 43 point, while the broader Nifty50 was at 11,927, up 6 point. As per the technical indicators range for the USDINR pair may be 70.90-71.50 levels. Rupee has an immediate support at 71.37 levels. A breach of the same may see rupee at 71.53 followed by 71.62 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 71.03 levels followed by 70.87 levels.

The dollar held firm on Monday after data showed surprise strength in the U.S. jobs market, but the currency was restrained from moving higher by worries about an escalation in the U.S.-China trade war. The dollar index stood almost flat at 97.706 in mid-Asian trade, after rising 0.3% on Friday. The euro traded at $1.10575, after hitting a one-week low of $1.10395 on Friday. The dollar changed hands at 108.58 yen. It had lifted to 108.92 yen on the U.S. jobs data before losing momentum. U.S. nonfarm payrolls increased by 266,000 jobs last month, the biggest gain in 10 months, while the unemployment rate ticked back down to 3.5%, its lowest level in nearly half a century. Those figures suggested the Trump administration's 17-month trade war with China, which has plunged manufacturing into recession, has not yet spilled over to the broader U.S. economy. Still, investors think that could change if trade tensions escalate further, especially if Trump goes ahead with planned tariffs on some $156 billion worth of products from China from Dec. 15. The market has been largely working on the assumption that those tariffs, which cover several consumer products such as cellphones and toys, will be dropped or at least postponed, given that Washington and Beijing agreed in October to work on a trade deal. Top White House economic adviser Larry Kudlow confirmed on Friday that the Dec. 15 deadline to impose the new tariffs remains in place, but added that President Donald Trump likes where trade talks with China are going. China's exports shrank for the fourth consecutive month in November, underscoring persistent pressures on manufacturers from the Sino-U.S. trade war. The currency has been bolstered by expectations that Prime Minister Boris Johnson's Conservative Party will win an outright majority in the upcoming election on Thursday, thereby ending a hung parliament and political paralysis on Brexit. The Conservative Party extended its lead over the Labour Party to 14 percentage points, up from 9 percentage points a week ago, an opinion poll by Survation for ITV's Good Morning Britain showed on Monday.