FX – MORNING UPDATE :

USDINR opened at 82.92 y’day and the pair traded in the 82.88-82.98 range. Spot USDINR closed at 82.96, gain of 4 ps for USD as against prior close of 82.92.

RBI reference rate was fixed at 82.95 on 13/09. Sep USD/INR closed at 83.02, gain of 3 ps for USD as compared to prior day’s close of 82.99. Sep Euro/INR closed at 89.20., GBP/INR at 103.55 and Yen/INR at 56.52. 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 climbed 76 points (0.38%) y’day. US S&P climbed 5 points (0.12%) . Nikkei declined 0.23% and Hang Seng declined 0.07%.

Euro is now at 1.0738, Pound at 1.2494, Yen at 147.12.

Commodities: Gold is now at USD 1911 and WT1Crude at USD 89/Brent at USD 92.

Interest rates: USD 10 Yr yield is at 4.23% and 3 m libor closed at 5.65%. Indian 10 yr benchmark yield closed at 7.18%.

Economic news: ECB meeting is the key event for the day. US retail sales also needs to be watched for US growth.

US headline CPI increased 0.6% in August from a month ago, which was the highest reading since June 2022.  The annual inflation reading rose from 3.2% to 3.7%, a tick above expectations. CPI core slowed from 4.7% yoy to 4.3% yoy, matched expectations. 

UK GDP contracted -0.5% mom in July, much worse than expectation of -0.2% mom. Services was down -0.5% mom, the main contributor to the fall in GDP. Production fell by -0.7% mom. Construction fell by -0.5% mom.In the three months to July compared with the prior three-month period, GDP increased by 0.2%

Data highlights: – -EU industrial production declined -1.1% m/m.

-UK industrial and manufacturing production declined -0.7% and -0.8% m/m.. UK GDP declined -0.5% m/m.

Thursday’s calendar : US PPI, retail sales and weekly jobless claims.

 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 82.88. 50 day moving average is at 82.56.200 day moving average is at 82.32. Daily MACD is in sell zone. Important support is at 82.80 and important resistance is at 83.22/83.35. Spot closed above the average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 83, S1:82.97, S2:82.91, R1:83.05, R2:83.09.             

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.