Rupee lower, Australian Dollar up

Thursday,   23-Jan-2020   12:20 PM (IST)

The Indian rupee is trading lower at 71.2450/2550 levels in the afternoon trade as a further decline in the Chinese Yuan on concerns over the spread of a respiratory virus offset the impact of near two-month lows on Brent crude. So far rupee traded in the range of 71.1750-71.2450 levels. Benchmark indices pared majority of the morning gains to trade flat with a positive bias. At 12:04 PM, the S&P BSE Sensex was trading at 41,199, up 85 points, while the broader Nifty50 was at 12,133, up 26 point. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 70.95-71.35 levels. Rupee has an immediate support at 71.26 levels. A breach of the same may see rupee at 71.33 followed by 71.41 and 71.49 levels. On the positive side rupee is likely to face resistance at 71.19 levels and if it is able to break the same then it may gain up to 71.12 levels followed by 71.07 and 71.02 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 3.51%, 4.11% and 4.11% respectively.

Several media reports in Asia suggested that China’s coronavirus has spread internationally, with the death toll rising. Japan, Macau, Taiwan and Singapore suspended travel to Wuhan, the epicentre. The rising concern over the spread of the novel virus has rattled financial markets, as investors sought flight to safety.  Therefore, the demand for the risk assets such as the regional equities, Wall Street futures and Treasury yields was almost killed. The Asian equities were a sea of red, led by the sharp decline in the Chinese stocks while oil prices tumbled to seven-week lows amid concerns that the virus outbreak might wallop the global economic upturn. The traditional safe-havens in gold and the yen drew bids, as gold prices firmed up near $1560 while USD/JPY dropped to an eight-day low near mid-109s. The strongest across the fx board was the Aussie dollar that benefited from a downtick in the Australian jobless rate and bigger-than-expected jobs growth figures. AUD/USD rallied hard to test the 0.6880 figure. The Kiwi also followed suit and briefly regained the 0.66 handle. Meanwhile, the Canadian dollar emerged the main laggard and drove USD/CAD to four-week highs above 1.3150, as oil-price weakness and broad-based US dollar rebound weighed. Among the European currencies, GBP/USD fell for the first time in four days and headed towards 1.3100 despite Brexit optimism while EUR/USD traded in a tight range ahead of the key European Central Bank (ECB) monetary policy decision.