Rupee opened lower, Dollar defensive vs. major currencies

Tuesday,   02-Jun-2020   10:30 AM (IST)

The Indian rupee opened the day lower at 75.56/57 levels compared to its previous close at 75.54/55 levels after Moody’s downgraded India’s long-term credit rating by a notch and retained its negative outlook.Indian government bond yields rise after Moody’s cut India’s sovereign rating by one notch to Baa3 and maintained negative outlook citing challenges through a period of weak growth amid worsening fiscal situation. Equity markets were trading nearly half a per cent higher on Tuesday, lifted by gains in certain index heavyweights. At 10:44AM, the S&P BSE Sensex was trading at 33,483, up 180 point, while the broader Nifty50 was at 9,882 up 56 point. As per the technical indicators range for the USDINR pair may be 75.30-75.80 levels. Rupee has an immediate support at 75.70 levels. A breach of the same may see rupee at 75.82 followed by 76.03 levels. On the positive side rupee is likely to face resistance at 75.39 levels and if it is able to break the same then it may gain up to 75.18 levels followed by 75.07 levels.

The dollar was on the defensive on Tuesday as investors stuck to hopes of a global economic recovery despite heightened concerns over U.S.-China tensions and mass protests in many U.S. cities over the death of a black man in police custody. The U.S. dollar's index against a basket of six major currencies stood at its weakest level since mid-March, at 97.790. The euro fetched $1.11295, little changed so far on Tuesday but holding near a 2-1/2-month high of $1.1154 touched on Monday. Sterling traded at $1.2491, having hit a one-month high of $1.2506. U.S. manufacturing activity eased off an 11-year low in May and although the reading was weaker than forecast, it fit into markets' expectations that the worst of the economic downturn was behind as businesses reopen. Against the safe-haven yen, the dollar was at 107.57 yen, stuck in a well-worn range between 106 and 108 over the last several weeks. President Donald Trump said on Monday he was deploying thousands of heavily armed soldiers and law enforcement to halt violence in the U.S. capital and vowed to do the same in other cities if mayors and governors fail to regain control of the streets. The protests erupted over the death of George Floyd, a 46-year-old African-American who died in Minneapolis police custody after being pinned beneath a white officer's knee for nearly nine minutes. Market risk sentiment was hurt only slightly on Monday when Bloomberg reported that China had told state-owned firms to halt purchases of soybeans and pork from the United States, raising concerns that the trade deal between the world's two biggest economies could be in jeopardy. The Australian dollar, often seen as a proxy bet on the strength of the Chinese economy, fetched $0.6794, having reached its highest levels since late January. The Reserve Bank of Australia is expected to keep rates on hold when it meets later on Tuesday. The Chinese Yuan stood flat at 7.1230 per dollar in offshore trade, near its highest levels in almost two weeks.