FX MORNING UPDATE

                                                                                       

USDINR opened gap up at 71.16 y’day and the pair traded in the 71.02-71.40 range. Spot USDINR closed at 71.40 y’day, gain of 61 ps for USD as against prior close of 70.79. RBI reference rate was fixed at 70.84 on Thursday. Aug USD/INR closed at 71.50, gain of 59 ps for USD as compared to prior day’s close of 70.91. Aug Euro/INR closed at 80.28, GBP/INR at 86.43 and Yen/INR at 68.02.

Rupee declined tracking Global sell off in EM Currencies. Argentine peso crashed 30%, Yuan weakened as markets were weighed down by Italian uncertainity, Hong Kong protests and US-China trade issues.

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 declined 1.65% y’day. DOW climbed 372 points(1.14%) y’day. Nikkei declined 1.11%  and Hang seng declined 2.10% y’day.

Euro is now at 1.1170 ,Pound at 1.2056,Yen at 106.36.    

Commodities: Gold is now at USD 1512 and WT1Crude at USD 56.40/Brent at USD 60.68.

Interest rates: USD 10 Yr yield is at 1.678% and 3 m libor closed at 2.26%. Indian 10 yr benchmark yield closed at 6.53%.        

Economic news: Indian CPI inflation stood at 3.15% in July. Food inflation is at 2.36%. Auto sales fell over 18% in July with car sales at the lowest in 20 years. Two wheeler sales declined 17%, Commercial vechicle sales fell 25% and car sales fell 30% in July.

The ZEW Indicator of Economic Sentiment points to a significant deterioration in the outlook for the German economy. The most recent escalation in the trade dispute between the US and China, the risk of competitive devaluations, and the increased likelihood of a no-deal Brexit place additional pressure on the already weak economic growth.

US trade representative announced overnight that certain products including clothing and cell phones have been removed from the tariff list based on “health, safety, national security and other factors” and will not face additional tariffs of 10%. Other tariffs will be delayed to Dec. 15 from Sep. 1 for certain goods.

Data highlights : – US Core CPI climbed 0.3% m/m.

-German and EU Zew surveys declined steeply to -44.1 and -43.6 respectively.

-UK unepmloyment rate was reported at 3.9% with claimant count change at 28k.

Wednesday’s calendar: – EU GDP and industrial production.

-UK CPI, RPI and PPI(output)

USD/INR   70.82 70.44
EUR/USD 1.1170 1.1228 1.1170
GBP/USD 1.2056 1.2098 1.2041
USD/JPY 106.36 106.97 105.07

 

                                                                                                                                                                       

Daily Support/Resistance table

CurrencyPairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1192 1.1214 1.1250 1.1272 1.1156 1.1134 1.1097
GBP/USD 1.2068 1.2095 1.2125 1.2151 1.2038 1.2011 1.1981
USD/JPY 106.21

 

107.35 108.11 109.26 105.45 104.31 103.54

 

USD/INR 71.27 71.52 71.65   71.14 70.89  

 

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Curency Pair Supports Resistances Trend Remarks
EURO/USD 1.1025 1.1280/1.1425 DN SIDE>1.1280
GBP/USD 1.20 1.2380 DN SIDE>1.26
USD/JPY 104.65 107.20/109 DN UP>109
USD/INR 70.45 71.80 UP SIDE<70.45
USD/CHF 0.97 0.9950 SIDE  UP >0.9950

Technicals: Spot closed above 50 and 100 day moving averages. 20 day moving average is at 69.50. 50 day moving average is at 69.30.200 day moving average is at 70.35. Daily MACD is in buy zone, implying bottom at 68.30. Important support is at 70.44 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: 71.38,S1:71.23, S2:70.97, R1:71.64, R2:71.79                                                        

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.

 

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