Rupee opened lower, Dollar retreated from highs vs. major currencies

Tuesday,   22-Jun-2021   10:49 AM (IST)

The Indian rupee opened the day lower at 74.17/18 levels compared to its previous close at 74.10/11 levels amid worries over elevated crude oil prices and bets that Fed inching closer to tapering bond purchases. Ahead of Powell’s testimony today, two Fed officials suggest they favor beginning the process of slowing bond purchases. Indian federal government bond yields marginally higher as crude oil prices rise and as Government to sell benchmark bond this week. India's benchmark Sensex index hit an all-time high on Tuesday, with the blue-chip Nifty also hovering close to its peak, a day after the country administered a record number of daily COVID-19 vaccine doses. At 10:16 AM, the S&P BSE Sensex was trading at 53,025 up 451 point, while the broader Nifty50 was at 15,886 up 140 point. As per the technical indicators range for the USDINR pair may be 73.80-74.35 levels. Rupee has an immediate support at 74.24 levels. A breach of the same may see rupee at 74.36 followed by 74.48 levels. On the positive side rupee is likely to face resistance at 74.03 levels and if it is able to break the same then it may gain up to 73.90 levels followed by 73.78 levels.

The dollar paused for breath on Tuesday as traders looked to testimony from U.S. Federal Reserve chair Jerome Powell for guidance, after a surprise shift in the central bank’s policy outlook, while cyptocurrencies nursed heavy losses. The greenback has gained sharply since the Fed last week flagged sooner-than-expected interest rate hikes, but dipped on Monday to hand back a little bit of that rise. Against the euro, the dollar nursed an overnight loss of about 0.4% to steady around $1.1909. It held at 110.31 yen, and the dollar index was steady at 91.915 after a loss of about 0.5% on Monday. The Australian and New Zealand dollars eased - after snapping losing streaks on Monday - with the Aussie down 0.2% to $0.7527 and the kiwi down 0.15% to $0.6978. Over the next few weeks the Aussie dollar could drop to around 74 cents and the kiwi to around 68 cents, he said, before they both might recover as the U.S. dollar charts a “raggedy” rise on the back of a strong U.S. pandemic recovery. In the medium term, investors will be keenly focused on the U.S. labour market as its performance is likely to have an influence on the Fed’s attitude. In the nearer future, all eyes are on Powell who appears before Congress from 1800 GMT. In prepared remarks he noted sustained labour market improvement and the recent increase in inflation. On Monday hawkish Fed officials such as St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan offered toned-down rhetoric. New York Fed President John Williams said it was too soon to shift policy, and that he expects inflation to ease from about 3% this year to close to 2% in 2022 and 2023 - which is something markets are not so sure about. Elsewhere on Tuesday sterling steadied at $1.3917, holding on to its overnight bounce as investors look forward to the British economy reopening further on July 19. Bitcoin and other cryptocurrencies had slumped on Monday as a tightening crackdown on trading and mining in China, as well as technical factors, whacked the asset class. Bitcoin lost more than 11% on Monday and rival ether fell more than 15% as both suffered their sharpest selloff in about a month. On Tuesday they held above May lows, with bitcoin at $31,535, but the mood did not improve.