FX – MORNING UPDATE :

USDINR opened at 82.81 on Friday and the pair traded in the 82.81-82.98 range. Spot USDINR closed at 82.93, loss of 14 ps for USD as against prior close of 83.07.

RBI reference rate was fixed at 82.95 on 22/09. Sep USD/INR closed at 82.95, loss of 11 ps for USD as compared to prior day’s close of 83.06. Sep Euro/INR closed at 88.30, GBP/INR at 101.69 and Yen/INR at 56.01. 1 year USDINR fwd premia was trading at around 1.76% p.a.  FX reserves stood at USD 593 bn as on Sept 15 th.

In Sep, FPI’S have sold Rs 11422 Cr of Equities and bought Rs 125 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 declined 68 points (0.34%) on Friday. US S&P declined 9 points (0.23%) . Nikkei declined 0.68% and Hang Seng climbed 2.6%.

Euro is now at 1.0648, Pound at 1.2241, Yen at 148.38.

Commodities: Gold is now at USD 1925 and WT1Crude at USD 90.30/Brent at USD 93.50.

Interest rates: USD 10 Yr yield is at 4.43% and 3 m libor closed at 5.65%. Indian 10 yr benchmark yield closed at 7.15%.

Economic news: Indian bonds has been included by JP Morgan in its Emerging bond index which is capitalized at USD 236 bn. Indian bond weightage is likely to be 10%. This implies likely inflows of USD 24 bn. Flows may begin from June 2024 and is likely to be staggered over 10 months. Other institutions like FTSE may also include Indian bonds in its index. This is likely to be positive over a longer period of time.

US markets faced a turbulent last week after Fed’s hawkish hold at 5.25-5.00%. While Fed’s messages were clear that interest rates are going to stay “higher for longer”, overall developments argue that investors are much less convinced on the “higher” part than the “longer”. S&P 500 and NASDAQ experiencing notable drops of -2.9% and -3.6% respectively.

10-year Treasury yield reached its highest point since 2007, while 2-year rate recorded its apex since 2006. Despite the risk aversion sentiment and elevated yields, Dollar index only nudged up by a mere 0.002%. Dollar would probably need to be convinced about the “higher” part before having another substantial break on the upside.

Data highlights: – US PMI(mfrg) dipped to 50.2.

-EU PMI(mfrg-flash) declined to 43.4 and PMI(services- flash) climbed to 48.4.

-UK PMI(mfrg-flash) was reported at 44.2 and PMI(services- flash) dipped to 47.2.

Monday’s calendar : German Ifo survey

 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 82.98. 50 day moving average is at 82.66.200 day moving average is at 82.37. Daily MACD is in buy zone. Important support is at 82.80 and important resistance is at 83.35. Spot closed above the average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 82.91, S1:83.03, S2:83.14, R1:82.82, R2:82.68.             

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 82.80/82.65 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 1.05. 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 below 50 and 200 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 1.21. Important resistance is at 1.2550/1.2620.

USD/YEN: The pair is above 50 and 200 day major averages. Daily MACD is in buy zone, implying important bottom at 144.40. Important resistance is at 151 and support is at 145.90/144.40.