USDINR opened at 81.49 on Friday and the pair traded in the 81.48-81.67 range. Spot USDINR closed at 81.52, loss of 7 ps for USD as against prior close of 81.59.

RBI reference rate was fixed at 81.54 on 27/01. Feb USD/INR closed at 81.68, loss of 4 ps for USD as compared to prior day’s close of 81.72. Feb Euro/INR closed at 89.01, GBP/INR at 101.04 and Yen/INR at 63.17. USDINR fwd premia was trading at around 2.35% p.a.  FX reserves stands at USD 573.75 bn as on Jan 20 th.  

In Jan, FII’S have sold Rs 13423 Cr of Equities till date and have bought Rs 2555 Cr of debt till date. In last Calendar Year, FII’S sold close to Rs 1.06 lac Cr worth of Equities.

Benchmark Nifty declined 287 points (1.61%) on Friday. DOW climbed 28 points (0.08%) y’day. Nikkei climbed 0.07%  and Hang Seng climbed 0.54% on Friday.

Euro closed the week at 1.0869, Pound at 1.2399, Yen at 129.85.

Commodities: Gold is now at USD 1928 and WT1Crude at USD 79.40/Brent at USD 86.40.

Interest rates: USD 10 Yr yield is at 3.50% and 3 m libor closed at 4.81%. Indian 10 yr benchmark yield closed at 7.38%.

Economic news: Union Budget on Feb 1 st and RBI policy meet on Feb 6 th are likely to set the trend for Equity and Rupee markets in coming weeks. Indian Equities are under heavy selling pressure due to steep decline in Adani group stocks.

US PCE price index rose 0.1% mom while core PCE price index (excluding food and energy) rose 0.3% mom. From the same month one year ago, the PCE price index slowed from 5.5% yoy to 5.0% yoy. Excluding food and energy, core PCE price index slowed from 4.7% yoy to 4.4% yoy.

Slowing Core PCE inflation may help Fed to slow down rate hikes.

In Japan, Tokyo CPI core (all items ex-fresh food), accelerated from 4.0% yoy to 4.3% yoy in January, above expectation of 4.2% yoy. That’s also the fastest annual increase in nearly 42 years since May 1981.

Fed, ECB and BOE meetings along with ISM, PMI surveys and US employment data are key events for the coming week.

Data highlights: – US Personal income climbed 0.2% m/m, spending declined -0.2% m/m and Core PCE Index climbed 0.3% m/m.

-US Pending home sales climbed 2.5% m/m.

Monday’s calendar : – No major data release.

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed below 20 ,50,100 day averages, but still above 200 day major moving averages.20 day moving average is at 81.92. 50 day moving average is at 82.12.200 day moving average is at 80.02. Daily MACD is in sell zone. Important support is at 81.42/81.24/81.10/80.50 and important resistance is at 81.93. Spot closed below its average level of the day.

Intraday supports and resistances for Feb contract are:

PP: 81.69, S1:81.59, S2:81.50, R1:81.78, R2:81.88.             

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 81.85+.

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 1.0740/1.0625. 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 1.2260/1.2160. 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 buy zone, implying important bottom at 127.25. Important resistance is at 131.50. Major resistance is at 131.60/134.

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