FX MORNING UPDATE

                                                                                       

USDINR opened at 71.67 and the pair traded in the 71.30-71.75 range. Spot USDINR closed at 71.45, loss of 11 ps for USD as against prior close of 71.56. RBI reference rate was fixed at 71.46. Feb USD/INR closed at 71.59, loss of 14 ps for USD as compared to prior day’s close of 71.73. Feb Euro/INR closed at 81.29, GBP/INR at 92.47 and Yen/INR at 65.29. Rupee has declined 2 Rupees since its recent level of 69.20 traded on 7 th Jan.

FII’S have sold Rs 504 Cr of Indian Equities in Jan. FII’S have sold Rs 2601 Cr of Indian debt securities in Jan  .

Benchmark Nifty closed flat y’day. DOW declined 220 points (0.87%) y’day. Nikkei declined 0.59% and Hang seng climbed 0.21%. y’day.

Euro is now at 1.1341, Pound at 1.2952,Yen at 109.75.    

Commodities: Gold is now at USD 1312 and WT1Crude at USD 52.27 /Brent at USD 61.28.

Interest rates: USD 10 Yr yield is at 2.65% and 3 m libor closed at 2.90%. Indian 10 yr benchmark yield closed at 7.36%.        

Economic news: RBI cut rates by 25 bps and shifted to neutral stance. Inflation forecast was reduced with Q4 CPI forecast at 2.8%. H1 2019-20 inflation is expected to be 3.2-3.4% and H2 inflation is expected to be below 3.9%. This paves the way for more rate cuts. GDP for 2018-19 is expected to be 7.2% and 7.4% for next fiscal. In other measures, RBI scrapped FPI limit of 20% in single corporate paper and banks are to assign risk weightage for NBFC lending as per credit rating. Farm loan collateral has been enhanced from 1 lac to 1.6 lacs.

BoE left Bank rate unchanged at 0.75% today. Asset purchase target was also held at GBP 435B. Both were done by unanimous 9-0 decision, as widely expected.

 

In the accompanying statement, BoE noted that growth slowed in late 2018 and “appears to have weakened further in early 2019”. Such slowdown “mainly reflects weaker global activity and Brexit uncertainties. BoE reiterated that the outlook will “continue to depend significantly on the nature of EU withdrawal, in particular: the new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond”

European commission slashed EU growth rate from 1.9% to 1.3% for 2019. The commission also pointed out there is “a high level of uncertainty” surrounding the outlook, and the projections are subject to downside risks. Risks include trade tensions, slowdown in China, global financial markets and emerging markets risks, as well as Brexit.

 Data highlights : – US Weekly jobless claims dipped to 234k.

-German industrial production declined -0.4% m/m.

Friday’s calendar: – No major data release.

USD/INR   71.68 71.49
EUR/USD 1.1341 1.1368 1.1324
GBP/USD 1.2952 1.2996 1.2854
USD/JPY 109.75 110.08 109.61

Daily Support/Resistance table

CurrencyPairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1344 1.1364 1.1388 1.1408 1.1320 1.1300 1.1275
GBP/USD 1.2933 1.3012 1.3075 1.3153 1,2870 1.2791 1.2728
USD/JPY 109.82

 

110.03 110.29 110.50

 

109.56 109.35 109.08

 

USD/INR 71.57 71.66 71.77   71.46 71.37

 

 

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Curency Pair Supports Resistances Trend Remarks
EURO/USD 1.1285/1.1215 1.1575 SIDE UP>1.1575
GBP/USD 1.29/1.28 1.33 UP DN<1.28
USD/JPY 105 111/112 SIDE UP>112
USD/INR 71.30/70.85 71.80 SIDE DN<71.10
USD/CHF 0.9715 1.00/1.10130 UP  SIDE <0.9850

Technicals: Spot closed above 20,50 and 200 day moving averages but still below 100 day major moving average. 20 day moving average is at 71.16. 50 day moving average is at 70.75. 200 day moving average is at 70. Daily MACD is in buy zone, implying bottom at 69.20. Important support zone is at 71.50 and later at 71.10. Spot closed below its average level of the day.  

Intra day supports and resistances for Feb contract are:

PP: 71.87,S1:71.59, S2:71.45, R1:72.02, R2:72.29.                                                          

Hedging strategy for USD/INR: Hedging decisions be taken according to comfort and accounting rates.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 200 day moving average. Next Major resistance is at 1.1570 and later at 1.17. Major support is at 1.1265/1.12. Daily MACD is in buy zone, implying an important bottom at 1.1285. Weekly MACD is in buy zone, implying important bottom at 1.1215.

GBP/USD: The pair is bullish and above all moving averages.Daily MACD  is in buy zone, implying important bottom at 1.2440 and weekly MACD is  in buy zone, implying important bottom at 1.2440. Important resistance is at 1.33. Important support is at 1.29 and later at 1.28.

USD/YEN: The pair is below major moving averages. Daily MACD is in buy zone, implying important bottom at 105. Next important resistance is at 111/112.

 

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