FX MORNING UPDATE

USDINR opened at 81.48 y’day and the pair traded in the 81.42-81.76 range. Spot USDINR closed at 81.72, gain of 33 ps for USD as against prior close of 81.39.

RBI reference rate was fixed at 81.60 on 24/01. Jan USD/INR closed at 81.66, gain of 20 ps for USD as compared to prior day’s close of 81.46. Jan Euro/INR closed at 88.78, GBP/INR at 100.79 and Yen/INR at 62.78. USDINR fwd premia was trading at around 2.30% p.a.  FX reserves stands at USD 572 bn as on Jan 13 th.  Reserves rose by USD 10 bn in one week.

PAIRSRBI REF RATE (24/01)
USDINR81.60
EURINR88.78
GBPINR101.09
JPYINR62.71

In Jan, FII’S have sold Rs 11892 Cr of Equities till date and have bought Rs 1085 Cr of debt till date. In last Calendar Year, FII’S sold close to Rs 1.06 lac Cr worth of Equities.

Benchmark Nifty closed flat (0.00%) y’day. DOW climbed 104 points (0.30%) y’day. Nikkei climbed 1.46% y’day and Hang Seng climbed 1.82% on Friday.

Euro is now at 1.0887, Pound at 1.2317, Yen at 130.24.

Commodities: Gold is now at USD 1938 and WT1Crude at USD 80/Brent at USD 86.30.

Interest rates: USD 10 Yr yield is at 3.45% and 3 m libor closed at 4.81%. Indian 10 yr benchmark yield closed at 7.36%.

Economic news: Rupee was volatile as it swung between 81.42 and 81.76. RBI’S intervention below 81 and month end buying contributed to Rupee decline in the last 2 days. Expect 81.25-82 range in coming days.

EU PMI Composite rose from 49.3 to 50.2, a 7-month high. UK PMI Composite dropped from 49.0 to 47.8, a 24-month low too.

US GDP and Core PCE data are crucial events for the week. US GDP may have still grown due to fall in inflation. If Core PCE index declines furher, USD may fall further. As Fed slows down rate hikes in 2023, monetary policy divergence will weigh down on USD.

Data highlights: – EU PMI(flash-mfg) was reported at 48.7 and PMI(flash-services) moved into expansion mode to 50.7.

-UK PMI(mfrg) was reported at 46.7 and PMI(services) remained in contraction mode at 48.

Wednesday’s calendar : – No major data releases.

USD/INR   81.7681.42
EUR/USD       1.08871.08981.0835
GBP/USD       1.23171.24141.2264
USD/JPY       130.24131.12129.74

Daily Support/Resistance table

Currency PairsPivotR1R2R3S1S2S3
EURO/USD1.08741.09131.09371.09761.08501.08111.0787
GBP/USD1.23371.24101.24871.25591.22601.21871.2110
USD/JPY130.36130.98131.74132.37129.60128.98128.22
USD/INR81.6381.8481.97 81.5081.29 

 MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency PairSupportsResistancesTrendRemarks
EURO/USD1.0740/1.05751.1045UPSIDE<1.0575
GBP/USD1.2110/1.18401.2445UPSIDE<1.2110
USD/JPY126.50134.50DNSIDE>134.50
USD/INR81.50/81.24/81.10/80.9081.94SIDEDN<81.24
USD/CHF0.90900.94DNSIDE>0.94

Technicals: Spot closed below 20 ,50,100 day averages, but still above 200 day major moving averages.20 day moving average is at 82.04. 50 day moving average is at 82.11.200 day moving average is at 79.98. Daily MACD is in sell zone. Important support is at 81.24/81.10/80.90/80.50 and important resistance is at 81.93. Spot closed above its average level of the day.

Intraday supports and resistances for Jan contract are:

PP: 81.61, S1:81.44, S2:81.23, R1:81.82, R2:81.99.             

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

However on directional basis, suggest the following:

Exports be hedged on rally to 81.90+.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is above 50 and 200 day major moving averages. Major resistance is at 1.0945/1.1045. Next major support is at 1.0740/1.0475. Daily MACD is in buy zone, implying an important bottom at 1.0480. Weekly MACD is in buy zone, implying important bottom at 0.9535.

GBP/USD: The pair is above 50 and 200 day moving averages. Daily MACD is in buy zone, implying important bottom at 1.1840 and weekly MACD is in buy zone, implying important bottom at 1.0380. Important support is at 1.2110/1.1840. Important resistance is at 1.2450/1.2750.

USD/YEN: The pair is below 20, 50 and 100 day moving averages. Daily MACD is in sell zone, implying important top at 134.50. Important support is at 126.50. Major resistance is at 134.50/138.50.

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