FX – MORNING UPDATE :

USDINR opened at 83.12 on Friday and the pair traded in the 83.03-83.12 range. Spot USDINR closed at 83.08, loss of 12 ps for USD as against prior close of 83.20. Rupee declined 31 ps in Sep as compared to prior month close of 82.77.

RBI reference rate was fixed at 83.06 on 29/09. Oct USD/INR closed at 83.16, loss of 13 ps for USD as compared to prior day’s close of 83.29. Oct Euro/INR closed at 88.26, GBP/INR at 101.97 and Yen/INR at 56.08. 1 year USDINR fwd premia was trading at around 1.80% p.a.  FX reserves declined by USD 3 bn and stood at USD 590 bn as on Sept 22 nd.

In Sep, FPI’S have sold Rs 16026 Cr of Equities and bought Rs 768 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 114 points (0.59%) on Friday. US S&P closed flat y’day (0%) . Nikkei declined 0.21% and Hang Seng climbed 2.51%.

Euro is now at 1.0468, Pound at 1.2074, Yen at 149.87.

Commodities: Gold is now at USD 1818 and WT1Crude at USD 88/Brent at USD 89.70.

Interest rates: USD 10 Yr yield is at 4.68% and 3 m libor closed at 5.65%. Indian 10 yr benchmark yield closed at 7.21%.

Economic news: Focus is on US employment data. Global financial markets experienced a turbulent month with USD surging supported by climbing US Yields. 10-year yields reached a new 16-year peak, registering the largest weekly increase since July, while 30-year yield ascended to levels unseen since 2010. Concurrently, the yield curve underwent a swift normalization, with 10-year vs. 2-year Treasury spread narrowing significantly.

USD rally was boosted by stronger than expected manufacturing data and surging yields. US ISM(mfrg) is in contraction mode, but the pace of decline has slackened, indicating a possible turnaround. This is the best reading in last 3 months. US Congress passed a stop gap funding bill, which has avoided a possible shutdown.

Despite USD’S robustness, Rupee declined only marginally in Sept, due to RBI’S intervention. Climbing Oil prices and hence rising trade deficit are negatives for Rupee. GST Collections climbed 10% y/y to Rs 1.62 lac Cr. Gross receipts from GST in the first half of the current fiscal improved 11% from the year-ago period to ₹9.92 trillion. The average monthly gross collection this fiscal is ₹1.65 trillion, which is 11% more than in the year-ago period.

Data highlights: – US Personal income climbed 0.4% m/m, spending also rose 0.4% m/m, Core PCE Index rose 0.1% m/m, below expectation of 0.2% m/m. Core PCE price index slowed from 4.3% yoy to 3.9% yoy, matched expectations.

-US ISM(mfrg) climbed to 49, construction spending climbed 0.5% m/m.

-EU CPI slowed from 5.2% yoy to 4.3% yoy in September, below expectation of 4.5% yoy. CPI core (ex energy, food, alcohol & tobacco) also slowed from 5.3% yoy to 4.5% yoy, below expectation of 4.8% yoy.

-EU unemployment rate held steady at 6.4%. EU PMI(mfrg-final) was reported at 43.4.

-UK GDP climbed 0.2% q/q. PMI(mfrg-final) was at 44.3.

Tuesday’s calendar : No major data release.

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 83.08. 50 day moving average is at 82.78.200 day moving average is at 82.41. 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: 83.20, S1:83.10, S2:83.03, R1:83.26, R2:83.37.             

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 1.0250. 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 1.18. 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.