FX MORNING UPDATE
USDINR opened gap up at 71.83 y’day and the pair traded in the 71.73-71.98 range. Spot USDINR closed at 71.79 y’day, gain of 19 ps for USD as against prior close of 71.60. RBI reference rate was fixed at 70.93 on Friday. Sep USD/INR closed at 71.89, gain of 19 ps for USD as compared to prior day’s close of 71.70. Sep Euro/INR closed at 79.30, GBP/INR at 89.21 and Yen/INR at 66.50.
Rupee declined as Crude continued to rally due to attack on Saudi’s Aramco Oil refinery. This could lead to 5% cut in Global supply. Fear of escalation kept Crude prices high. Indian Equities melted on fears of inflationary pressure that could make RBI pause in rate reduction. Focus is on GST council meeting due to expectations of rate reduction for auto sector.
FII’S have nett sold Rs 2605 Cr of Indian Equities in Sep . FII’S have nett bought Rs 46768 Cr of Indian Equities in this calendar Year till date. FII’S have nett bought Rs 3279 Cr of Indian debt securities in Sep. FII’S have nett bought Rs 31882 Cr of Indian debt in this calendar year till date.
Benchmark Nifty declined 1.69% y’day. DOW declined 142 points(0.52%) y’day. Nikkei climbed 0.06% and Hang seng declined 1.23% y’day.
Euro is now at 1.1066 ,Pound at 1.2491,Yen at 108.26.
Commodities: Gold is now at USD 1509 and WT1Crude at USD 58.81./Brent at USD 64.36.
Interest rates: USD 10 Yr yield is at 1.84% and 3 m libor closed at 2.10%. Indian 10 yr benchmark yield closed at 6.73%.
Economic news: Focus is on Fed policy and statement. While Fed is expected to cut rates, statement will be significant as it will reveal future path to easing.
Data highlights : – US industrial production climbed 0.6% m/m.
-German Zew survey showed that sentiment improved to -22.5.
Wednesday’s calendar: – US building permits, housing starts
-UK CPI, RPI and PPI(output)
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 71.67. 50 day moving average is at 70.28.200 day moving average is at 70.18. Daily MACD is in sell zone, implying top at 72.40. Important support is at 70.85/70.35 and next important resistance is at 72.25. Spot closed below its average level of the day.
Intra day supports and resistances for Aug contract are:
PP: 71.90,S1:71.72, S2:71.56, R1:72.06, R2:72.24
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 1.1250 Major support is at 1.0840. Daily MACD is in sell zone, implying an important top at 1.1250. Weekly MACD is in sell zone, implying important top at 1.1415.
GBP/USD: The pair is bullish and is trading above 50 day major moving average, but still below 200 day moving average.Daily MACD is in buy zone, implying important bottom at 1.20 and weekly MACD is in buy zone, implying important bottom at 1.20. Important resistance is at 1.2565/1.2645. Important support is at 1.2320/1.2265.
USD/YEN: The pair is between major moving averages. Daily MACD is in buy zone, implying important bottom at 104.45. Next important resistance is at 109.30. Important support is at 107.