FX – MORNING UPDATE :

USDINR opened at 82.85 y’day and the pair traded in the 82.81-82.89 range. Spot USDINR closed at 82.85, gain of 1 ps for USD as against prior close of 82.84.

RBI reference rate was fixed at 82.87 on 14/03. Mar USD/INR closed at 82.86, unchanged for USD as compared to prior day’s close of 82.86. Mar Euro/INR closed at 90.67, GBP/INR at 106.10 and Yen/INR at 56.22. 1 year USDINR fwd premia was trading at around 1.62% p.a.  FX reserves stood at USD 625 bn, as on March 1 st. Reserves climbed USD 6 bn w/w.

In March, FPI’S bought Rs 9652 Cr of Equities and bought Rs 3532 Cr of debt . In last calendar year, FII’S have net bought Rs 172853 Cr of Equities and have net bought Rs 70489 Cr of debt.

Benchmark Nifty climbed 149 points (0.68%) y’day. US S&P declined 15 points (0.29%) y’day. Nikkei climbed 0.46% and Hang Seng declined 0.71% y’day.

Euro is now at 1.0877, Pound at 1.2739, Yen at 148.41.

Commodities: Gold is now at USD 2164 and WT1Crude at USD 81/Brent at USD 85.

Interest rates: USD 10 Yr yield is at 4.28% and 3 m libor closed at 5.59%. Indian 10 yr benchmark yield closed at 7.04%.

Economic news:  US PPI rose 0.6% mom in February above expectation of 0.3% mom. For the 12-month period, PPI rose 1.6% yoy, above expectation of 1.1% yoy. That’s the highest level since September 2023. Retail spending was back in positive territory in February, after a sizeable decline to start the year. Retail sales rose 0.6% month-on-month (m/m) in February, reversing most of January’s -1.1 % decline (revised from -0.8% previously). This was lower than the consensus forecast calling for slightly stronger growth of 0.8%.The pick-up in retail spending is unlikely to be good news for policymakers at the Federal Reserve.

USD gained against European majors after strong retail sales and PPI data.

ECB Governing Council member proposed two rate reductions “before the summer break” and a total of four throughout the year. This strategy, he argues, is essential to ensure that ECB’s monetary policy “does not become too restrictive” in the face of current economic challenges.

Data highlights: – US PPI climbed 0.6% m/m, retail sales climbed 0.3% m/m and weekly jobless claims declined to 209k.

Friday’s calendar : – US industrial production.

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed below major moving averages.20 day moving average is at 82.89. 50 day moving average is at 83.200 day moving average is at 82.88. Daily MACD is in sell zone. Important support is at 82.60 and important resistance is at 82.95/83.12. Spot closed below the average level of the day.

Intraday supports and resistances for March contract are:

PP: 82.87, S1:82.83, S2:82.80, R1:82.90, R2:82.94.             

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

However on directional basis, suggest the following:

USD exports be hedged at 82.95. Imports be hedged at 82.65 for 1 month.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is above major moving averages. Major resistance is at 1.0995/1.1040. Next major support is at 1.0830. Daily MACD is in buy zone, implying an important support at 1.07. Weekly MACD is in sell zone, implying important top at 1.1140.

GBP/USD: The pair is above major moving averages. Daily MACD is in buy zone, implying important bottom at 1.2517 and weekly MACD is in buy zone, implying important bottom at 1.2517. Important support is at 1.2517. Important resistance is at 1.29/1.2995.

USD/YEN: The pair is below 50 day, but still above 200 day moving averages. Daily MACD is in sell zone, implying important top at 150.90. Important resistance is at 149.20/150.90 and support is at 146/144.35.

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