USDINR opened gap up at 76.64 on Friday and the pair traded in the 76.56-76.97 range. Spot USDINR closed at 76.92, gain of 66 ps for USD as against prior close of 76.26. RBI reference rate was fixed at 76.75 on 06/05. May USD/INR closed at 77.09, gain of 57 ps for USD as compared to prior day’s close of 76.52. May Euro/INR closed at 81.66, GBP/INR at 95.35 and Yen/INR at 59.22. USDINR fwd premia was trading at around 4.15% p.a.  FX reserves stands at USD 597.73 bn as on 29/4.

Rupee declined steeply after gaining to 76. Surge in USD against majors and Asian Currencies along with upward movement of Crude prices pushed Rupee lower. FX reserves dipped further. This is the straight eight week of reserves fall. This will test RBI’S resolve to defend Rupee. FII selling is unabated. Trade deficit is also expanding and April deficit stood at USD 20 bn.

In 2022-23, FII’S have sold 6933 Cr of Equities till date and have sold Rs 2675 Cr of debt till date. In 2021-22, FII’S net sold Rs 128897 cr in Equity segment and have net bought Rs 4805 cr of debt. In 2020-21 financial Year, FII’S nett bought Rs 2,74,203 Cr of Equities and have sold Rs  42820 Cr in debt.

Benchmark Nifty declined 271 points (1.63%) on Friday. DOW declined 98 points (0.30%).Nikkei climbed 0.69% and Hang Seng declined 3.81%.

Euro closed the week at 1.0548, Pound at 1.2346, Yen at 130.57.

Commodities: Gold is now at USD 1882 and WT1Crude at USD 110/Brent at USD 113.

Interest rates: USD 10 Yr yield is at 3.14% and 3 m libor closed at 1.36%. Indian 10 yr benchmark yield closed at 7.45%.

Economic news: US non-farm payroll employment rose 428k in April, slightly above expectation of 400k. Total employment was still down by -1.2m, or -0.8%, from its pre-pandemic levels. Average hourly earnings rose 0.3% mom, below expectation of 0.4% mom. Unemployment rate was unchanged at 3.6%, matched expectations.

ECB members supported rates to move quickly to zero from negative levels. BOE Chief economist warned of 10% inflation with the real possibility of recession. He said that Central banks will have to do a tight rope walk to control inflation and ensure that economies do not enter into recession.

USDINR fwd premia climbed to 4.15% per annum for 1 year, tracking hike in repo rates. 10 Year yield jumped further to 7.45%.

Data highlights: -German industrial production declined -3.9% m/m.

-UK PMI(construction) climbed to 58.2.

Monday’s calendar: – EU Sentix investor confidence survey.

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed above 200 day major moving averages.20 day moving average is at 76.30. 50 day moving average is at 76.200 day moving average is at 74.92. Daily MACD is in buy zone, implying bottom at 76. Important resistance is at 77.10/77.45 and important supports are at 76.78 and 76.55. Spot closed above its average level of the day.

Intraday supports and resistances for May contract are:

PP: 76.96, S1:76.77, S2:76.46, R1:77.27, R2:77.46.             

Hedging strategy: Hedging decisions be taken according to comfort and accounting rates.

However on directional basis, suggest the following:

USDINR Exports can be hedged at 77+ levels.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below major major moving averages. Major resistance is at 1.0750/1.0940. Next major support is at 1.0475/1.0340.. Daily MACD is in sell zone, implying an important top at 1.1185. Weekly MACD is in sell zone, implying important top at 1.1498.

GBP/USD: The pair is below all moving averages. Daily MACD is in sell zone, implying important top at 1.33 and weekly MACD is in sell zone, implying important top at 1.3730. Important support is at 1.2260. Important resistance is at 1.2410/1.2640.

USD/YEN: The pair is above major moving averages. Daily MACD is in buy zone, implying important bottom at 114.40. Important support is at 128.65/127.10.

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