Oct 04 2018

Rupee opened lower again amid surging US yields

Financial Market Overview

4th October, 2018

Morning Coffee

 

Rupee:-

  • The rupee opened at 73.60 versus the dollar compared with its previous close of 73.34.
  • The Indian rupee opened at fresh lifetime lows against the dollar after upbeat U.S. economic data boosted 10-year Treasury yields to multiyear highs. For the rupee, crude oil prices are another source of pressure in light of Brent crude nearing $86 a barrel.
  • We expect the pair to trade in the range between 73.50 -74.00.

Indian Equities:-

  • Bears kept tight control on DalalStreet as the market cracked further in opening on Thursday, with the Sensexfalling 0.43% to 35821.
  • The 50-share NSE Nifty fell 0.95% to 10755. The market breadth weakened further as about four shares declined for every share rising on the BSE.

Global Markets:-

  • Japanese shares are lower today as the Nikkei 225 falls 0.74%. Hang Seng is down by 0.34%. The stock market in Shanghai is closed today.
  • North and South American markets finished lower as of the most recent closing prices. The DOW lost 0.40% and the S&P 500 was down by 0.32%.
  • Asian currencies sold off on Thursday. The Indonesian rupiah declined 0.5% and offshore yuan fell past the 6.90 level against the dollar. The South Korean won and Thai baht tumbled by 0.6% each.
  • The yield on the benchmark 10-year Treasury jumped more than 10 basis points to 3.18% on Wednesday and the dollar index advanced for the sixth starlight session to 96.05 following better-than-expected U.S. services and private employment data. The Institute of Supply Management non-manufacturing index climbed to an over-two-decade high and ADP September private payrolls data trumped expectations. Federal Reserve chair Jerome Powell’s remarks that the monetary authority may raise rates above an estimated neutral setting amid a robust U.S. economy too contributed to the rout in Treasuries.
  • The market is coming to terms that U.S. economic momentum is strong and that the Fed would have little choice but to carry on hiking rates. Following the selloff in Treasuries, currencies and bonds of twin deficit economies like India and Indonesia will come under renewed selling pressure.
  • Benchmark Brent crude oil contract 0.3% lower at $86.01 per barrel, after jumping 1.8% in the previous session.