FX – MORNING UPDATE :

USDINR opened at 83.26 y’day and the pair traded in the 83.12-83.25 range. Spot USDINR closed at 83.23, gain of 4 ps for USD as against prior close of 83.19.

RBI reference rate was fixed at 83.18 on 12/10. Oct USD/INR closed at 83.29, gain of 4 ps for USD as compared to prior day’s close of 83.25. Oct Euro/INR closed at 88.50, GBP/INR at 102.51 and Yen/INR at 56.01. 1 year USDINR fwd premia was trading at around 1.83% p.a.  FX reserves declined by USD 3 bn and stood at USD 587 bn as on Sept 29 th.

In Oct, FPI’S have sold Rs 5132 Cr of Equities and bought Rs 1222 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 declined 17 points (0.09%) y’day. US S&P declined 27 points (0.62%) . Nikkei climbed 1.72% and Hang Seng climbed 1.84%.

Euro is now at 1.0542, Pound at 1.2194, Yen at 149.80.

Commodities: Gold is now at USD 1876 and WT1Crude at USD 83/Brent at USD 86.

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 7.31%.

Economic news: India’s Sept CPI inflation eased to 5.02%. Food inflation eased to 6.56% . CPI was at 6.83% in Aug. This is the lowest reading in last 3 months. IIP climbed 10.3% in Aug. Mfrg sector climbed 9.3%, mining grew by 12,3%, Power sector climbed 15.3%. IIP has climbed 6.1% in Apr-Aug period.

US CPI rose 0.4% mom above expectation of 0.3% mom. CPI core (ex-food and energy) rose 0.3% mom, matched expectations. Energy index rose 1.5% mom. Food index rose 0.2% mom.

Over the last 12 months. CPI was unchanged at 3.7% yoy, above expectation of 3.6% yoy. CPI core slowed from 4.3% yoy to 4.1% yoy , matched expectations.

UK economy grew by 0.2% mom, aligning with market expectations

Data highlights: – US weekly jobless claims dipped to 209k and CPI climbed 3.7% y/y. Core CPI climbed 0.3% m/m.

-UK industrial and manufacturing production declined -0.7% m/m and -0.8% m/m  respectively

Friday’s calendar : EU industrial production

 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 83.14. 50 day moving average is at 82.95.200 day moving average is at 82.42. Daily MACD is in sell 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: 83.25, S1:83.21, S2:83.13, R1:83.33, 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 82.80/82.75 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 1.0450/1.0250. Daily MACD is in buy zone, implying an important bottom at 1.0450. 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 buy zone, implying important bottom at 1.2035 and weekly MACD is in sell zone, implying important top at 1.3145. Important support is at 1.2035/1.18. Important resistance is at 1.2440/1.2495.

USD/YEN: The pair is above 50 and 200 day major averages. Daily MACD is in sell zone, implying important top at 150.20. Important resistance is at 150.20 and support is at 147.50/146.50.