FX – MORNING UPDATE :

USDINR opened at 83.21 y’day and the pair traded in the 83.12-83.23 range. Spot USDINR closed at 83.20, loss of 3 ps for USD as against prior close of 83.23.

RBI reference rate was fixed at 83.15 on 28/09. Oct USD/INR closed at 83.29, loss of 4 ps for USD as compared to prior day’s close of 83.33. Oct Euro/INR closed at 87.92, GBP/INR at 101.68 and Yen/INR at 56.12. 1 year USDINR fwd premia was trading at around 1.80% 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 192 points (0.98%) y’day. US S&P climbed 25 points (0.59%) . Nikkei declined 1.48% and Hang Seng declined 1.15%.

Euro is now at 1.0569, Pound at 1.2208, Yen at 149.38.

Commodities: Gold is now at USD 1865 and WT1Crude at USD 91.60/Brent at USD 93.

Interest rates: USD 10 Yr yield is at 4.59% and 3 m libor closed at 5.65%. Indian 10 yr benchmark yield closed at 7.21%.

Economic news: Indian CAD widened to USD 9.2 bn in Q1, 1.1% of GDP. This is against USD 17.9 bn, 2.1% of GDP in Q1 23. However, CAD was only 1.3 bn, 0.2% of GDP in Q4 23. Trade deficit is likely to widen due to climb in Oil prices.

Leading German economic research institutes have announced that Germany is bracing for an economic contraction of -0.6% in 2023, a significant downward adjustment by 0.9% from the spring 2023 prediction.  

U.S. Senate and House on Thursday were due to push ahead with conflicting government funding plans, raising the chances of the fourth partial shutdown of the federal government in a decade beginning in just three days.

US Core PCE index is the important data event for the day.

USD strength remains unabated as 10 Year yield surged to 15 Year high of 4.62%.

Data highlights: – US Weekly jobless claims declined to 204k, GDP climbed 2.1% q/q and pending home sales declined 7.1% m/m.

Friday’s calendar : US Personal income, spending, Core PCE Index

-EU CPI

-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 83.06. 50 day moving average is at 82.75.200 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 Oct contract are:

PP: 83.30, S1:83.22, S2:83.15, R1:83.37, R2:83.45.             

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 1.0740/1.0945. 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.