FX – MORNING UPDATE :

USDINR opened at 82.95 y’day and the pair traded in the 82.86-83 range. Spot USDINR closed at 82.92, loss of 9 ps for USD as against prior close of 83.01.

RBI reference rate was fixed at 82.97 on 12/09. Sep USD/INR closed at 82.99, loss of 10 ps for USD as compared to prior day’s close of 83.09. Sep Euro/INR closed at 89., GBP/INR at 103.51 and Yen/INR at 56.67. 1 year USDINR fwd premia was trading at around 1.70% p.a.  FX reserves stood at USD 598 bn as on Sept 1 st.

In Sep, FPI’S have sold Rs 5460 Cr of Equities and bought Rs 473 Cr of debt . In 2022-23 fiscal year, FII’S have net sold Rs 27593 Cr of Equities and have net bought Rs 838 Cr of debt.

Benchmark Nifty closed flat (0%) y’day. US S&P declined 25 points (0.57%) . Nikkei declined 0.33% and Hang Seng declined 0.36%.

Euro is now at 1.0749, Pound at 1.2485, Yen at 147.41.

Commodities: Gold is now at USD 1932 and WT1Crude at USD 89/Brent at USD 92.

Interest rates: USD 10 Yr yield is at 4.29% and 3 m libor closed at 5.65%. Indian 10 yr benchmark yield closed at 7.20%.

Economic news: India’s Aug CPI inflation eased to 6.83% from July reading of 7.44%. Food inflation eased to 9.94% from 11.41%. Though inflation eased, it is still above the comfort band of 2-6%. Vegetable prices, still high, rose 26.1 per cent against a staggering 37.34 per cent rise in July, while prices of oils and fats declined by 15.3 per cent after dropping by 16.8 per cent in the previous month. Cereal prices remained in double digits and rose 11.6 per cent in August as compared with 13 per cent in July.

IIP climbed 5.7% in July vs 3.8% in June. For the first four months this fiscal, India’s industrial output is up 4.8 per cent year-on-year, down from 10.0 per cent in April-July 2022. Mfrg sector grew by 4.6%, mining climbed 10.7%. Electricity output climbed 8%, consumer durables declined by 2.7%, consumer non-durables grew by 7.4%. Construction sector grew by 11.4%.  

Eurozone’s ZEW Economic Sentiment slid from -5.5 to -8.9, trailing the predicted -6.2. ZEW remarked, “The assessment of the current economic situation in Germany by the financial market experts is even more pessimistic than in August 2023.” 

Crude prices rallied sharply on Tuesday, hitting their highest levels for the year after a monthly report from the Organization of Petroleum Exporting Countries (OPEC) said that oil markets will tighten further this year amid robust demand and lower production. Brent crude is trading at USD 92.

US CPI data is the key data event for the day.

Data highlights: – German Zew sentiment was reported at -11.4.

-UK unemployment rate was reported at 4.3%.

Wednesday’s calendar : US CPII

-EU industrial production

-UK industrial and manufacturing production. UK GDP

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed above 50 and 200 day moving averages.20 day moving average is at 82.90. 50 day moving average is at 82.55.200 day moving average is at 82.31. Daily MACD is in buy zone. Important support is at 82.80 and important resistance is at 83.22/83.35. Spot closed at the average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 82.99, S1:82.91, S2:82.84, R1:83.06, R2:83.14.             

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

However on directional basis, suggest the following:

USD exports be hedged at 83.30/83.50. Imports be hedged at 82.80 for 1 month.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below major moving averages. Major resistance is at 1.0945/1.1065/1.1140/1.1275. Next major support is at 1.0635. Daily MACD is in sell zone, implying an important top at 1.1275. Weekly MACD is in sell zone, implying important top at 1.1275.

GBP/USD: The pair is still above 200 day moving averages, but below 50 and 100 day averages. Daily MACD is in sell zone, implying important top at 1.3145 and weekly MACD is in sell zone, implying important top at 1.3145. Important support is at 1.2450/1.2350. Important resistance is at 1.2820/1.30/1.3145.

USD/YEN: The pair is above 50 and 200 day major averages. Daily MACD is in buy zone, implying important bottom at 137.35. Important resistance is at 151 and support is at 144/142.