FX – MORNING UPDATE :
USDINR opened at 82.95 y’day and the pair traded in the 82.92-83.02 range. Spot USDINR closed at 83.01, gain of 5 ps for USD as against prior close of 82.96.
RBI reference rate was fixed at 82.97 on 14/09. Sep USD/INR closed at 83.05, gain of 3 ps for USD as compared to prior day’s close of 83.02. Sep Euro/INR closed at 89.18, GBP/INR at 103.61 and Yen/INR at 56.50. 1 year USDINR fwd premia was trading at around 1.78% p.a. FX reserves stood at USD 598 bn as on Sept 1 st.
|
PAIRS |
RBI REF RATE (13/09) |
|
USDINR |
82.97 |
|
EURINR |
89.15 |
|
GBPINR |
103.68 |
|
JPYINR |
56.39 |
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 33 points (0.16%) y’day. US S&P climbed 37 points (0.84%) . Nikkei climbed 1.52% and Hang Seng climbed 0.24%.
Euro is now at 1.0641, Pound at 1.2419, Yen at 147.50.
Commodities: Gold is now at USD 1915 and WT1Crude at USD 91/Brent at USD 94.
Interest rates: USD 10 Yr yield is at 4.28% and 3 m libor closed at 5.65%. Indian 10 yr benchmark yield closed at 7.10%.
Economic news: US retail sales rose by 0.6% month-on-month (m/m) in August, up from the downwardly revised 0.5% (previously 0.7%) reading in July. Sales in the retail sales “control group”, which excludes the above volatile components (autos, building materials and gas) and is used to estimate personal consumption expenditures (PCE) came in at 0.1% m/m – this was above consensus forecast which called for a -0.1% decline.
ECB delivered a dovish 25bps rate hike. The accompaning statement indicated that the current tightening cycle could have reached its peak already. Also, core inflation and growth forecasts for 2024 and 2025 were revised down.
ECB President cited the persistent nature of inflation being “too high for too long” as the primary motivator behind this strategy to “reinforce progress” in ushering inflation back to the target in a “timely manner”.
ECB added, “the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target”. Future decisions will “ensure” that the interest rates are set at “sufficiently restrictive levels for as long as necessary.
EU Growth is projected to be at 0.7% in 2023 (prior 0.9%), 1.0% in 2024 (prior 1.5%), and 1.5% in 2025 (prior 1.6%). In the new economic projections, inflation is forecast to be at 5.6% in 2023 (prior projection at 5.1%), 3.2% in 2024 (prior 3.0%) and 2.1% in 2025 (prior 2.3%). The upward revision for 2023 and 2024 mainly reflects a higher path for energy prices.
Euro tumbled after ECB decision. Encouraging economic data from US and ECB’S downward projection of growth and dovish rate hike offered a perfect springboard for USD’S rally.
Euro broke through 1.07 support zone.
Oil climbed further on reports that China announced further stimulus measures including cut in reserve requirement ratio for banks by 25 bps. Prospect of improvement in Chinese demand and tighter supply pushed Oil prices to USD 94.
Data highlights: – US PPI climbed 0.7% m/m and Core PPI climbed 0.2% m/m, Core retail sales climbed 0.6% m/m and weekly jobless claims dipped to 220k.
Friday’s calendar : US industrial production.
|
USD/INR |
|
83.02 |
82.92 |
|
|
EUR/USD |
1.0641 |
1.0753 |
1.0631 |
|
|
GBP/USD |
1.2419 |
1.2507 |
1.2395 |
|
|
USD/JPY |
147.50 |
147.58 |
147.01 |
Daily Support/Resistance table
|
Currency Pairs |
Pivot |
R1 |
R2 |
R3 |
S1 |
S2 |
S3 |
|
EURO/USD |
1.0675 |
1.0719 |
1.0797 |
1.0841 |
1.0597 |
1.0553 |
1.0475 |
|
GBP/USD |
1.2437 |
1.2479 |
1.2549 |
1.2590 |
1.2367 |
1.2325 |
1.2255 |
|
USD/JPY |
147.36 |
147.71 |
147.93 |
148.27 |
147.14 |
146.79 |
146.57 |
|
USD/INR |
82.98 |
83.05 |
83.08 |
|
82.94 |
82.88 |
|
MAJOR SUPPORTS/RESISTANCES AND TREND TABLE
|
Currency Pair |
Supports |
Resistances |
Trend |
Remarks |
|
EURO/USD |
1.0635 |
1.0945/1.1065 |
DN |
UP>1.1070 |
|
GBP/USD |
1.2350 |
1.28/1.30/1.3150 |
DN |
UP>1.2820 |
|
USD/JPY |
144.50/142 |
151 |
UP |
SIDE<143.90 |
|
USD/INR |
82.80 |
83.22/83.35/83.47 |
UP |
SIDE<82.78 |
|
USD/CHF |
0.87/0.8550 |
0.8820 |
DN |
SIDE>0.8820 |
Technicals: Spot closed above 50 and 200 day moving averages.20 day moving average is at 82.88. 50 day moving average is at 82.58.200 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: 83.03, S1:82.97, S2:82.91, R1:83.09, R2:83.15.
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.
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 1.2350. 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.