Rupee ended higher, Euro higher vs. Dollar

Thursday,   14-Jan-2021   04:02 PM (IST)

The Indian rupee ended the session higher at 73.04/05 levels compared to its opening at 73.19/20 levels after touching the high of 72.94/95 levels on the back of persistent dollar inflows into local equities. The rupee had risen to an over-one-week high of 72.94 on dollar sales by two large foreign banks, likely for their custodian clients. Most regional equity gauges advanced, while Asian currencies were mixed. The wholesale price-based inflation slowed to 1.22 per cent in December on easing food prices, as per government data released on Thursday. The inflation based on Wholesale Price Index (WPI) was 1.55 per cent in November 2020, and 2.76 per cent in December 2019. Indian federal government bond yields ended marginally lower after the central bank bought debt, while investors now await more open market purchases for a further signal on yields. The Indian Equity markets ended Thursday's volatile session with marginal gains amid weekly options expiry as Tata Consultancy Services (TCS) and Reliance Industries helped the benchmark indices erase early losses. The S&P BSE Sensex closed at 49,584, up 92 points, or 0.19 per cent. The broader Nifty50 index, meanwhile, ended the session at 14,596, up 0.21 per cent. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.26%, 4.85% and 4.84% respectively.

EUR/USD is trading near crucial support at 1.2140, as the US dollar and Treasury yields are cheering reports that President-elect Joe Biden is considering a bigger-than-expected stimulus package of about $2 trillion. The ECB minutes and US weekly jobs data could influence the spot ahead of Powell’s speech. GBP/USD bounces back towards 1.3650 ahead of the European session. Despite the quick pullback, the bulls remain cautious amid the US dollar’s rebound while the focus shifts towards the critical US weekly jobless claims data and a speech by the Fed Chair Powell. The dollar held above three-year lows versus major peers on Thursday as expectations for President-elect Joe Biden's fiscal stimulus pushed yields of U.S. government bonds higher. 10-year Treasury yield rose after CNN reported the stimulus will be around $2 trillion, adding support for the dollar. The dollar has risen in four of the past five trading sessions as the prospect of more stimulus has weighed on U.S. government bonds, sending the benchmark Treasury yield above 1% for the first time since March. Expectations are already running high for the stimulus, but many analysts believe the spending push has already been priced in. Moreover, the currency's recent recovery is threatened by a build-up of bearish dollar positions. speculators have been net short the dollar since mid-March, as investors' surging appetite for riskier assets hurt demand for the greenback. U.S. stimulus supports risk sentiment, it could weigh on the dollar, which is considered a safe haven.