Rupee higher, Australian Dollar up

Tuesday,   10-Dec-2019   12:22 PM (IST)

The Indian rupee is trading higher at 70.89/90 levels (12:10 pm) in the afternoon deals on carry trade-related flows, but broad market assessed the outlook for U.S. and China trade deal ahead of a deadline for additional tariffs on Chinese shipments. The Monetary Policy Committee’s unexpected decision last week to leave the key policy rate unchanged are helping the carry flows. So far rupee traded in the range of 70.89-71.0325 levels. Benchmark indices are trading lower dragged down by auto and tech stocks. At 12:04 PM, the S&P BSE Sensex was trading at 40,352, down 135 points, while the broader Nifty50 was at 11,899, down 39 point. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 70.70-71.30 levels. Rupee has an immediate support at 70.98 levels. A breach of the same may see rupee at 71.08 followed by 71.17 and 71.30 levels. On the positive side rupee is likely to face resistance at 70.83 levels and if it is able to break the same then it may gain up to 70.70 levels followed by 70.60 and 70.50 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 3.57%, 3.41% and 3.93% respectively.

The market mood was cautiously optimistic in Asia on Tuesday, as the optimism over a likely United States-Mexico-Canada Agreement (USMCA) and upbeat China’s inflation data was somewhat negated by the looming US tariffs hike and negative US-Sino trade headlines. The Chinese news outlet, Global Times said the downtrend in bilateral trade will be difficult to reverse even though a Phase One deal is reached. Across the fx space, the US dollar steadied vs. its main competitors, allowing most majors to post small gains. The Kiwi emerged as the strongest, up +0.20% above the 0.6550 level following upbeat Chinese data while the Aussie also benefited from stabilizing the Australian NAB Business Survey and the iron-ore price surge, with 0.6840 tested. The USD/JPY pair bounced off support near 108.50 amid positive S&P 500 futures but the uptick was limited by declines in the Asian equities and Treasury yields. The Canadian dollar ticked higher against the greenback on USMCA optimism, with USD/CAD downed nearly 20-pips to near 1.3225. Amongst the European currencies, both EUR/USD and GBP/USD traded better bid, with Cable looking to revisit eight-month highs of 1.3180 ahead of the UK GDP and Industrial Output data. On the commodities front, both crude benchmarks trade modestly flat amid trade and growth worries, as traders await the weekly Crude Stocks data. Meanwhile, gold prices extended the side trend around 1460, in search of a clear direction.