Rupee expected to track Asia forex lower on renewed Trump tariff worries
The 1-month non-deliverable forward indicated a open in the 85.62-85.64 range, versus 85.52 on Tuesday. The rupee has been largely range bound in recent sessions, holding between the key support zone at 85.90–86.00 and resistance near 85.30.
"Both of these levels are difficult to break," a currency trader at a bank said.
"You'll likely have to wait until July 9 for a decisive move, and that's when we could see a breakout either way."
He added for now the risks are skewed toward a decline past 86 rather than a rally above 85.30.
Trump ruled out extending the July 9 deadline for trade deals on Tuesday and said he remained doubtful about reaching a deal with Japan. Japanese shares dropped 1% and the yen weakened versus the dollar.
The renewed trade worries put pressure on risk-sensitive currencies, while dampening appetite for riskier assets. Asian equities and currencies declined amid wariness over potential U.S. action after the deadline.
The Korean won, the Malaysian ringgit and the Thai baht were all down by 0.3% and the offshore Chinese weakened past 7.1650 to the U.S. dollar.
Meanwhile, in a development seen as mildly negative for the dollar, U.S. Federal Reserve Chair Jerome Powell said he did not rule out the possibility of cutting interest rates at the Fed's July 29–30 meeting, while reiterating that the central bank will wait for more economic data before deciding on rate cuts.
Traders have slightly increased the odds of a cut at that gathering.
Investors assess Trump's massive tax-and-spending bill, which was passed by the U.S. Senate and will return to the House for final approval.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 85.75; onshore one-month forward premium at 10.50 paise
** Dollar index at 96.66
** Brent crude futures up 0.1% at $67.2 per barrel
** Ten-year U.S. note yield at 4.25%
** As per NSDL data, foreign investors bought a net $97 million worth of Indian shares on June 30
** NSDL data shows foreign investors bought a net $181.2 million worth of Indian bonds on June 30
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