Rupee opened higher, Dollar in narrow range vs. major currencies

Friday,   29-May-2020   10:30 AM (IST)

The Indian rupee opened the day higher at 75.71/72 levels compared to its previous close at 75.7450/7550 levels tracking a broad decline in the dollar index while board market awaits U.S. President Donald Trump’s press conference on China today, likely over Hong Kong’s new security law. Indian government bond yields little changed in thin early ahead of weekly auction. Equity markets dipped half a per cent, tracking weakness in global markets amid escalating US-China tensions, and ahead of the release of GDP data for January-March quarter of 2019-20 (Q4FY20). At 10:07 AM, the S&P BSE Sensex was trading at 32,055, down 146 point, while the broader Nifty50 was at 9,470 down 20 point. As per the technical indicators range for the USDINR pair may be 75.50-76.00 levels. Rupee has an immediate support at 75.83 levels. A breach of the same may see rupee at 75.97 followed by 76.04 levels. On the positive side rupee is likely to face resistance at 75.62 levels and if it is able to break the same then it may gain up to 75.55 levels followed by 75.41 levels.

The dollar was hemmed into a narrow trading range on Friday as traders' focus shifted to U.S. President Donald Trump's response to China's passage of a national security law for Hong Kong. The Yuan pulled away from a record low in offshore trade, but investors remain nervous ahead of Trump's announcement later on Friday of policy moves that could ignite a diplomatic row between Washington and Beijing. The greenback was on course for a weekly loss against major currencies as progress in lifting corona virus lockdowns and stimulus plans in Europe weakened demand for safe havens, but the mood could quickly worsen if Sino-U.S. tensions increase. The dollar stood at $1.1073 per euro in Asia on Friday, close to its lowest since March 30. The common currency was headed for its second weekly gain against the greenback as the EU's announcement of a 750-billion-euro coronavirus recovery fund fuelled optimism about the euro-zone economy. The dollar last bought 0.9644 Swiss francs, on course for a 0.7% weekly decline. The greenback was little changed at 107.67 yen. The Australian dollar bought $0.6630, close to its highest in more than two months, while the New Zealand dollar traded at $0.6204, near its strongest since March 11. The Aussie and the kiwi were on course for weekly gains as investors cheered the gradual re-opening of business activity in the two antipodean economies. China's parliament on Thursday approved national security legislation for Hong Kong that Western countries fear could erode the city's freedoms. Trump, who has vowed a tough U.S. response, told reporters he would hold a news conference on China on Friday. The risk is Hong Kong could lose some of the special privileges in enjoys under U.S. law, which would threaten its status as a global financial hub. The potential stand-off has stirred memories of last year's bruising Sino-U.S. trade war, which weighed on the global economy and roiled financial markets. Offshore, the Yuan traded at 7.1725 per dollar, near a record low of 7.1966 reached on Thursday. Investors will closely watch the opening of the onshore Yuan and moves in Chinese stocks to gauge market sentiment before Trump's announcement. This week the euro led the charge against a weakened dollar after EU policymakers unveiled fiscal stimulus combining grants and loans intended to ease dissent among euro-zone countries. Sterling was on course for its second weekly gain, supported by broad selling in the dollar this week. However, sentiment for the pound has been somewhat negative due to calls for the resignation of an influential aide to British Prime Minister Boris Johnson, lack of progress in EU trade talks, and speculation about negative interest rates.