India Rupee At Over 1-Mth High On Yuan Rise, US Tariffs Delay

India Rupee At Over 1-Mth High On Yuan Rise, US Tariffs Delay

12 Sep 2019 05:32 PM

Financial Market Overview

12th Sep, 2019

Evening Coffee

MARKETS AT CLOSE                                    

Indian Rupee

  • The Indian rupee rose to a more-than-one-month high against the dollar, tracking gains in the Chinese yuan after U.S. President Donald Trump postponed an increase in tariffs on $250 billion of Chinese shipments by two weeks. The rupee ended at 71.13 to a dollar, its highest since Aug. 9, against its previous close of 71.65. The unit opened at 71.42 and gained 0.7%, logging its biggest single-session gain since Aug. 27.
  • Recent development on the trade front between the U.S. and China looks like both nations are willing to negotiate and put an end to the trade spat. Further fall in the pair will be seen during the coming sessions if the ECB cuts refinancing interest rates to negative at the monetary policy meeting later today.
  • Asian currencies ended higher against the dollar today, led by the Chinese yuan, as global risk sentiment improved after Trump agreed to delay increasing tariffs on $250 billion worth of Chinese imports from Oct. 1 to Oct. 15.

Indian Equities

  • Benchmark indices ended lower after five-day gains. The BSE Sensex was down 166.54 points at 37,104.28 and the Nifty fell 52.90 points to 10,982.80, but the market breadth was positive. About 1,346 shares advanced against 1,112 declining shares on the BSE.
  • The index has formed a probable inverse Head & Shoulder pattern and has its neckline at 11,150 levels. There will be support around the 10,850-10,800 levels which is likely to act as a cushion on the lower side in case of a decline.

Global Markets

  • European markets are mixed today. The DAX is up 0.16% while the FTSE 100 gains 0.03%. The CAC 40 is off 0.04%.
  • In the wake of timid premarket Futures action on Wednesday, and then some choppy action in the first 30-60 minutes or so of the regular session, the major averages then managed to put together an advance. This as a Chinese trade olive branch seemed to underpin sentiment. The Dow Industrials managed to rise for a 6th straight session matching a 6-day run in June. The last time the Dow rose more than 6 straight days was an 8-day streak in May 2018. With the gains, both the Dow and S&P 500 index closed above their maximum Fibonacci retracement zones of their July/August declines. The Dow also reclaimed the 27,000 level and the SPX ended back over 3,000. The Nasdaq still has work to do. Nevertheless, as stands, positive Dow/SPX action adds to a bullish tilt.
  • The euro hovered near $1.10 on Thursday as traders waited to see the scale of fresh stimulus expected from the European Central Bank, while China's yuan and Australia's dollar were buoyed by further signs of a thaw in the U.S.-China trade war. After a difficult August in which concerns about a global recession sparked a scramble into safer assets, investors have been returning to riskier markets this month, encouraged by China and the United States making moves to ease trade tensions and by receding fears of a no-deal Brexit.
  • Prices unexpectedly rose in August and underlying producer prices rebounded, but that data will not change financial market expectations that the Federal Reserve will cut interest rates again next week to support a slowing economy. The Labor Department said its producer price index for final demand edged up 0.1% last month as a jump in the cost of services offset the largest drop in the price of goods in seven months. That followed a 0.2% gain in July.