USDINR opened at 73.62 on Friday and the pair traded in the 73.30-73.65 range. Spot USDINR closed at 73.33, loss of 27 ps ps for USD as against prior close of 73.60.RBI reference rate was fixed at 73.43. Rupee continued its recovery from 74.45 levels. Indian FX reserves dipped by 5.4 bn in the week ended Oct 12 th to USD 394.40 bn. Oct USD/INR closed at 73.36, loss of 32 ps for USD as compared to prior day’s close of 73.68. Oct Euro/INR closed at 84.20, GBP/INR at 95.65 and Yen/INR at 65.25.
FII’S have sold Rs 18111 Cr of Indian Equities in Oct till date . FII’S have sold Rs 11497 Cr of Indian debt securities in Oct till date . On a cumulative basis, FII’S have sold Rupees 27734 Cr of Indian Equities till date for this calendar year and have sold Rupees 60798 Cr of Indian debt in this calendar year till date.
Benchmark Nifty declined 1.43% on Friday. DOW climbed 64 points (0.26%) on Friday. Nikkei declined 0.56% and Hang seng climbed 0.42% y’day.
Euro closed the week at 1.1514, Pound at 1.3081,Yen at 112.55.
Commodities: Gold is now at USD 1230 and WT1Crude at USD 69.35.
Interest rates: USD 10 Yr yield is at 3.198% and 3 m libor closed at 2.39%. Indian 10 yr benchmark yield closed at 7.92%.
Economic news: Global and Indian Equity markets experienced strong bouts of volatility due to climbing US interest rates, US-Saudi stand-off, trade tensions and unsettled Oil prices.
FOMC minutes for Sept was more hawkish than expected.The minutes noted that “participants generally anticipated that further gradual increases in the target range for the federal funds rate would most likely be consistent with a sustained economic expansion, strong labor market conditions and inflation near 2 percent over the medium term.” That is, it’s a consensus for rate hikes to continue.
The minutes also added that “a substantial majority of participants expected that the year-end 2020 and 2021 federal funds rate would be above their estimates of the longer-run rate.” And, “a few participants expected that policy would need to become modestly restrictive for a time and a number judged that it would be necessary to temporarily raise the federal funds rate above their assessments of its longer-run level”.
Moody’s downgraded Italy’s rally to Baa3, a notch above junk, with a “stable” outlook. Moody’s also indicated “Italy still exhibits important credit strengths that balance the weakening fiscal prospects.”
US Treasury dept refrained from naming China as Currency manipulator and put China on monitoring list along with India, Japan and Korea.
Chinese Q 3 GDP missed expectation and climbed 6.5% y/y.
UK-EU stand off on Brexit continued.
Data Highlights: – US housing starts dipped to 1.2 mn and building permits declined to 1.24 mn.
-US Weekly jobless claims declined 1 k to 210k. Phily Fed mfrg index climbed to 22.2. Existing home sales declined marginally to 5.15 mn.
-EU CPI was finalized at 2.1% y/y.
-UK CPI climbed 2.4% y/y, RPI climbed 3.3% y/y and PPI(output) climbed 0.4% m/m.
-UK retail sales declined -0.8% m/m.
Monday’s calendar:- No major data.
Daily Support/Resistance table
MAJOR SUPPORTS/RESISTANCES AND TREND TABLE
Technicals: Spot closed above 100 and 200 day major moving averages. 20 day moving is at 73.30. 50 day moving average is at 71.63. 200 day moving average is at 67.30. Daily MACD is in sell zone, implying top at 74.47 . Important support zone is at 72.90. Spot closed below its average level of the day.
Intra day supports and resistances for Oct contract are:
PP: 73.72,S1:73.39, S2:73.22, R1:73.89, R2:74.22.
Hedging strategy for USD/INR: Hedging decisions be taken according to comfort and accounting rates.
CROSS CURRENCY TECHNICALS:
EURO/USD: The pair is below major moving averages. Next Major resistance is at 1.1620/1.1820 and later at 1.1960. Major support is at 1.1430 and later at 1.13. Daily MACD is in sell zone, implying an important top at 1.1820. Weekly MACD is in sell zone, implying important top at 1.2560.
GBP/USD: Trend is sideways in daily chart. Daily MACD is in buy zone, implying important bottom at 1.2925 and weekly MACD is in buy zone, implying important bottom at 1.2665. The pair is trading below 200 day moving average. Important resistance is at 1.33 and later at 1.35. Important support is at 1.2925 and later at 1.2785.
USD/YEN: The pair is above major moving averages. Daily MACD is in sell zone, implying important top at 114.56. Next important support is at 111.60/110.55. Important resistance is at 113.15 and later at 114.60.