Rupee opened tad lower, Dollar up vs. major currencies

Friday,   15-Jan-2021   10:43 AM (IST)

The Indian rupee opened the day tad lower at 73.0750/0850 levels compared to its previous close at 73.04/05 levels but moved up to 72.9950/73.0050 levels in early deals amid subdued reaction to U.S, President-elect Joe Biden’s coronavirus relief package. India's government bond yields jump, with the benchmark yield rising to its highest in three weeks, as there was no word from the central bank on debt purchase next week against market expectation about continuation of special open market operation. Indian shares edged lower on Friday, dragged down by index heavyweights. At 10:08 AM, the S&P BSE Sensex was trading at 49,353 down 231 point, while the broader Nifty50 was at 14,526 down 70 point. As per the technical indicators range for the USDINR pair may be 72.80-73.30 levels. Rupee has an immediate support at 73.12 levels. A breach of the same may see rupee at 73.21 followed by 73.35 levels. On the positive side rupee is likely to face resistance at 72.93 levels and if it is able to break the same then it may gain up to 72.80 levels followed by 72.67 levels.

The dollar was up on Friday morning in Asia, however Federal Reserve Chair Jerome Powell’s dovish comments that interest rates would not rise any time soon capped its gains. The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.06% to 90.267. During a live-streamed interview with Princeton University, Powell said that the economy remains far from where the Fed wants it to be, and that he sees no reason to alter its highly accommodative stance “until the job is well and truly done.” The Fed’s asset-buying program has also weighed on the dollar, as it increases supply of the currency and thus diminished its value. Biden released details of the $1.9 trillion “American Rescue Plan” on Thursday, which includes a wave of new spending, more direct payments to households, an expansion of jobless benefits and an enlargement of vaccinations and virus-testing programs. However, questions have been raided over how he and his administration plan to foot the bill. The dollar rebounded to as high as 90.73 at the start of the week from as low as 89.206 on Jan. 6. It continued a rally driven by the prospect of further stimulus, which weighed on U.S. government bonds and sent the benchmark 10-year Treasury yield above 1% for the first time since March 2020. However, some investors are already predicting that the greenback will resume a decline that saw it slide almost 7% last year versus major peers as the global economy recovers from COVID-19, concerns are mounting that the rise in yields will temper that weakness. Bitcoin continued its recovery after seeing a nearly $12,000 plunge from the record $42,000 reached during the previous week, and briefly topped the $40,000 mark overnight.