On Tuesday morning , Indian domestic unit (rupee) likely to start trade with firm note after gained on Monday 0.70% to close at 74.32/$, its strongest level since March 18, intraday trading range was 74.92-74.28 levels.
On Monday, US-based Brookfield is said to have brought in about half a billion dollars, creating instant demand for the rupee, three currency traders told. If equity/investment flows continue, the rupee is likely to rise further.
The benchmark government bond yield rose to 6.17% Monday, with investors incurring mark-to-market losses. When bond yields rise, prices fall. This month, the rate gauge jumped 40 basis points after the central bank’s policy minutes hinted at diminishing prospects of a rate cut later this year.
Foreign portfolio investors net purchased more than Rs 46,000 crore this month, the highest since March last year. Since the beginning of August, the Rupee Options Volatility, a barometer of calmness, dropped 60 basis points to 3.84%.
INTRADAY RANGE - 73. 63 (73.88 - 74.57 ) 74.93
GLOBAL HIGHLIGHTS
The dollar held firm on Tuesday, shrugging off selling pressure from a move higher in equities, as investors seemed to temper their bearish bets against the greenback ahead of a Thursday speech from U.S. Federal Reserve Chair Jerome Powell.
Fed Chair Powell on Thursday addresses a virtual Jackson Hole symposium with the theme "Navigating the Decade Ahead: Implications for monetary policy." Investors expect he might address the bank's strategy - especially its 2% inflation target, with speculation that could become an average rather than nominal aim.
We expect more consolidation in euro/dollar this week because of early signs the Eurozone economic recovery is losing momentum.
Sterling was pressured back below $1.31 to last fetch $1.3071, and not helping was lack of progress in the latest round of Brexit talks with the European Union.
The oil-sensitive Canadian dollar fell about 0.3% overnight to 1.3238 per U.S. dollar, even though oil prices rose
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He in a “regularly scheduled call,” with both sides seeing progress made on resolving issues in the phase one trade deal between the two countries, the U.S. Trade Representative’s Office said in a statement.
MAJOR FX INTRADAY RANGE
EUR/USD - UPSIDE SELL
1.1893 (1.1825 - 1.1757) 1.1715
GBP/USD - UPSIDE SELL
1.3213 (1.3116 - 1.3012)
USD/JPY - BUY ON DIP
106.46 (106.14 - 105.82)
DOLLAR INDEX - BUY ON DIP
94.04 ( 93.53 - 93.02 ) 92.51
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