13/08/2019

FX MORNING UPDATE                                                                                      

USDINR opened at 70.55 y’day and the pair traded in the 70.44-70.82 range. Spot USDINR closed at 70.79 on Friday, gain of 10 ps for USD as against prior close of 70.69. RBI reference rate was fixed at 70.84 on Thursday. Aug USD/INR closed at 70.91, gain of 10 ps for USD as compared to prior day’s close of 70.81. Aug Euro/INR closed at 79.50, GBP/INR at 85.60 and Yen/INR at 67.08.

Govt indicated that it is willing to consider rolling back cess on tax affecting FPI’S. Govt also met industry leaders and indicated that a package to address economic slowdown is in the offing. It was a volatile week for Currency and Equity markets. Indian developments and US-China trade issues triggered either big wins or losses and big intra day swings every day. In a latest development, US President said that trade talks with China could be suspended.

FII’S have nett sold  Rs 9668 Cr of Indian Equities in Aug . FII’S have nett bought Rs 55832 Cr of Indian Equities in this calendar Year till date. FII’S have pulled out Rs 22000 Cr of Indian Equities since budget day. FII’S have nett bought Rs 1086 Cr of Indian debt securities in Aug FII’S have nett bought Rs 19869 Cr of Indian debt in this calendar year till date.

Benchmark Nifty climbed 0.70% on Friday. DOW declined 90 points(0.34%) on Friday. Nikkei climbed 0.44%  and Hang seng declined 0.69% on Friday.

Euro closed the week at 1.1200 ,Pound at 1.2031,Yen at 105.70.

Commodities: Gold is now at USD 1508 and WT1Crude at USD 54.22/Brent at USD 58.30.

Interest rates: USD 10 Yr yield is at 1.734% and 3 m libor closed at 2.26%. Indian 10 yr benchmark yield closed at 6.50%.        

Economic news: Indian IIP growth declined to 2% in June vis a vis 3.1% in May and 7% in June 2018. Mfrg output grew only by 1.2% in June as against 6.9% in June 2018. Core sector output growth slowed to 0.2% in June. SBI and major banks cut rates by 10-30 bps after RBI repo rate cut.

UK GDP contracted by -0.2% qoq in Q2, worse than expectation of 0.0% qoq. That’s also the first quarterly contraction since 2012. GDP grew 1.2% yoy.

Crude rallied on reports that Saudi Arabia is contemplating further production cuts to keep prices higher. 

Data highlights : – US PPI climbed 0.2% m/m.

-UK industrial and manufacturing production declined -0.1% and -0.2% m/m respectively.

Monday’s calendar: – No major data releases

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed above 50 and 100 day moving averages. 20 day moving average is at 69.35. 50 day moving average is at 69.33.200 day moving average is at 70.35. Daily MACD is in buy zone, implying bottom at 68.30. Important support is at 70 and later at 69.80  and next important resistance is at 71.80. Spot closed above its average level of the day.  

Intra day supports and resistances for Aug contract are:

PP: 70.80,S1:70.66, S2:70.42, R1:71.04, R2:71.18                                                        

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 1.1025. 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 1.2210 and later at 1.2380. Important support is at 1.20.

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