FX MORNING UPDATE  

                                                                                     

USDINR opened at 69.20 y’day and the pair traded in the 69.01-69.20 range. Spot USDINR closed at 69.06 y’day, gain of 30 ps for USD as against prior close of 68.76. RBI reference rate was fixed at 68.85 on Wednesday. Aug USD/INR closed at 69.24, gain of 26ps for USD as compared to prior day’s close of 68.98. Aug Euro/INR closed at 76.61, GBP/INR at 84.04 and Yen/INR at 63.68.

FII’S have nett sold  Rs 13813 Cr of Indian Equities in July . FII’S have nett bought Rs 65000 Cr of Indian Equities in this calendar Year till date. FII’S have nett bought Rs 8758 Cr of Indian debt securities in July. FII’S have nett bought Rs 19124 Cr of Indian debt in this calendar year till date.

Benchmark Nifty declined 1.24% y’day. DOW declined 280 points(1.05%) y’day. Nikkei climbed 0.09% y’day and Hang seng declined 0.76% y’day.

Euro is now at 1.1089 ,Pound at 1.2119,Yen at 107.05.    

Commodities: Gold is now at USD 1444 and WT1Crude at USD 54.85/Brent at USD 61.75.

Interest rates: USD 10 Yr yield is at 1.88% and 3 m libor closed at 2.26%. Indian 10 yr benchmark yield closed at 6.42%.        

Economic news: Fed cut interest rate by -25bps to 2.00-2.25% as widely expected. USD rallied as Fed Chairman said that this is only a mid cycle adjsutement and not a process of lengthy rate cuts. The statement noted that job market is solid and overall environment is not negative for growth. Fed Chairman said that decision of rate cut was taken keeping in mind the soft business invsetment cycle.                                       

US Equities crashed, Yen gained and US bond yields declined sharply as US President said that he would impose 10% tariff on additional Chinese imports of USD 300 bn. This seems to be a bullying tactics on Fed to lower rates again. US President was disappointed with Fed’s decision to cut rates only by 25 bps. US mfrg expanded at the slowest pace in 3 Years, as per latest ISM (mfrg) data. Brent Oil prices slumped 7% on news of 10% tariff. Weakening US mfrg data and trade issues with China seems to outweigh steady drawdowns in Oil inventory.

BoE left Bank Rate unchanged at 0.75% as widely expected. Asset purchase target was also kept at GBP 435B. Both decisions were made by unanimous vote. BoE noted in the statement that “global trade tensions have intensified and global activity has remained soft.” That led to “substantial decline” in forecast interest rates in advanced economies and “material loosening in financial conditions”, including the UK. Also, an “increased perceived likelihood” of no-deal Brexit further lowered UK interest rate and led to Sterling’s “marked depreciation.

Data highlights : – US ADP employment report showed that private sector added 156k jobs.

-US Weekly jobless claims was reported at 215k.

-US ISM(mfrg) declined to 51.2. Prices paid fell steeply to 45.1, indicating softness in wages.

-US Construction spending declined -1.3% m/m.

-EU CPI climbed 1.1% y/y and unemployment rate was reported at 7.5%.

-EU PMI(mfrg-final) was reported at 46.5, indicating contraction.

-UK PMI(mfrg) remained in contraction mode at 48.

Friday’s calendar: – US Nonfarm payrolls, factory orders  and trade balance.

-EU retail sales and PPI

-UK PMI(construction)                                                                                

USD/INR   69.20 69.01
EUR/USD 1.1089 1.1095 1.1027
GBP/USD 1.2119 1.2170 1.2080
USD/JPY 107.05 107.50 106.86

Daily Support/Resistance table

CurrencyPairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1067 1.1107 1.1135 1.1175 1.1039 1.0999 1.0971
GBP/USD 1.2124 1.2168 1.2214 1.2258 1.2078 1.2034 1.1988
USD/JPY 107.99

 

108.76 110.08 110.85 106.66 105.90 104.57

 

USD/INR 69.09 69.17 69.28   68.98 68.90  

 

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Curency Pair Supports Resistances Trend Remarks
EURO/USD 1.1110 1.1190/1.1280/1.1425 DN SIDE>1.1280
GBP/USD 1.2135/1.20 1.2580 DN SIDE>1.26
USD/JPY 106.80 109/110 DN UP>110.50
USD/INR 68.30 69.10 DN UP>70
USD/CHF 0.98 0.9950 SIDE  UP >0.9950

 

Technicals: Spot closed below major moving averages. 20 day moving average is at 68.76. 50 day moving average is at 69.18.200 day moving average is at 70.50. Daily MACD is in buy zone, implying bottom at 68.30. Next support is at 68.30. Important resistance is at 69.10 and later at 69.35 .Spot closed below its average level of the day.  

Intra day supports and resistances for Aug contract are:

PP: 69.01,S1:68.84, S2:68.75, R1:69.10, R2:69.27                                                         

Hedging strategy for USD/INR: Hedging decisions be taken according to comfort and accounting rates.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below major moving averages. Next Major resistance is at 1.1415. Major support is at 1.1110. Daily MACD is in sell zone, implying an important top at 1.1415. Weekly MACD is in sell zone, implying important top at 1.1415.

GBP/USD: The pair is bearish and is trading below major moving averages.Daily MACD  is in sell zone, implying important top at 1.2580 and weekly MACD is  in sell zone, implying important top at 1.3385. Important resistance is at 1.26 and later at 1.2785. Important support is at 1.2130 and later at 1.20.

USD/YEN: The pair is below  major moving averages. Daily MACD is in buy zone, implying important bottom at 107. Next important resistance is at 109 and later at 110.50. Important support is at 106.80 and later at 104.50.

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