Rupee opened higher, Pound slips vs. Dollar

Wednesday,   11-Dec-2019   09:06 AM (IST)

The Indian rupee opened the day higher at 70.89/90 levels compared to its previous close at 70.9175/9275 levels amid expectations of more dollar inflows. Indian government bonds little changed in thin-volume early trade as traders await retail inflation data for further cues on interest rates. Benchmark indices are trading with marginal gains. At 9:20 AM, the S&P BSE Sensex was trading at 40,302, up 62 point, while the broader Nifty50 was at 11,881, up 25 point. As per the technical indicators range for the USDINR pair may be 70.65-71.10 levels. Rupee has an immediate support at 71.00 levels. A breach of the same may see rupee at 71.12 followed by 71.20 levels. On the positive side rupee is likely to face resistance at 70.80 levels and if it is able to break the same then it may gain up to 70.72 levels followed by 70.60 levels.

The British pound slipped early on Wednesday after a poll showed a narrowing lead for Prime Minister Boris Johnson’s Conservative Party in an election later in the week, while U.S. dollar movement looked to the Federal Reserve’s policy meeting. Investors were also focusing on what U.S. President Donald Trump will do with U.S. tariffs on nearly $160 billion worth of Chinese consumer goods, due to set in on Dec. 15. Investors have generally believed the tariffs would be at least postponed to salvage a trade deal with China. Sterling fell 0.25% to $1.3122, giving back about a cent after hitting an 8 1/2-month high of $1.3215 on Tuesday. A closely watched model from pollsters YouGov showed Britain’s prime minister is on course to win a majority of 28 in parliament at Thursday’s election, down sharply from a forecast of 68 last month. The pound had rallied for the past couple of months on rising expectations that Johnson will secure an outright majority in parliament after a Dec. 12 election to end Britain’s political paralysis over Brexit since 2016. The dollar was traded at 108.80 yen, flat in early Asia after a gain of 0.15% the previous day. It drew firmness from a Wall Street Journal report of officials from both the United States and China saying the groundwork was being laid to push back the Dec. 15 tariff deadline. The White House’s top economic and trade advisers are expected to meet in coming days with Trump over that decision, one person briefed on the situation said. Economic uncertainty stemming from the U.S.-China trade war has prompted the U.S. Federal Reserve to cut interest rates three times this year. It is almost unanimously expected to leave interest rates unchanged on Wednesday. Fed Policymakers’ updated projections for the U.S. economy and interest rates will be the main focus to assess whether they think the rate cuts so far are enough to keep the economy rolling for another year.