FX MORNING UPDATE
USDINR opened gap up at 71.79 on Thursday and the pair traded in the 71.54-71.80 range. Spot USDINR closed at 71.66 , gain of 10 ps for USD as against prior close of 71.56. RBI reference rate was fixed at 71.58 on Thursday. Feb USD/INR closed at 71.67, gain of 9 ps for USD as compared to prior day’s close of 71.58. Feb Euro/INR closed at 77.38, GBP/INR at 92.23 and Yen/INR at 63.94. FX market was closed on Friday in Mumbai.
FII’S nett bought Rs 10750 Cr of Indian Equities in Feb till date . FII’S have nett bought Rs 10618 Cr of Indian debt securities in Feb till date.
Benchmark Nifty declined 0.37% on Thursday. DOW declined 227 points (0.70%) on Friday. Nikkei declined 0.39% and Hang seng declined 1.09% on Friday.
Euro closed the week at 1.0848,Pound at 1.2964,Yen at 111.59.
Commodities: Gold is now at USD 1645 and WT1Crude at USD 53.45/Brent at USD 58.45.
Interest rates: USD 10 Yr yield is at 1.47% and 3 m libor closed at 1.71%. Indian 10 yr benchmark yield closed at 6.43%.
Economic news: Fed minutes showed that Fed is monitoring impact of corona virus. However, it is still not hurtful to US economy. Minutes mentioned that “the committee viewed the “distribution of risks to the outlook for economic activity as more favorable than at the previous meeting,” while also noting downside risks “remained prominent.” Its conclusion, however, that the virus has yet to cross the “material” threshold warranting a reassessment of the need for additional accommodation is disputed by the bond market. Market is pricing two rate cuts this year.
Gold rallied and US Treasury yields declined as investors remained wary of negative impact of corona virus. The outbreak has certainly worsened since last week—there are now around 76,000 cases in China, 208 in South Korea, 109 in Japan and 15 in the United States. The virus could impact supply chains, travel, tourism and manufacturing outsourced from China. Major tech company APPLE has already stated that sales would be lower and supplies will be affected.
Euro and UK manufacturing and service PMI’S exceeded expectations, kindling hopes of a turnaround.
Data highlights : – US weekly jobless claims was reported at 210k, existing home sales declined 1.3% m/m to 5.46 mn.
-EU Consumer confidence climbed to -7. PMI(mfrg) improved to 49.1 and PMI(services also improved to 52.8.
-EU CPI was finalized at 1.4% y/y.
-UK retail sales climbed 0.9% m/m. PMI(mfrg) improved to 51.9 and PMI(services) was reporteda t 53.3.
Monday’s calendar: – No major data release.
Daily Support/Resistance table
MAJOR SUPPORTS/RESISTANCES AND TREND TABLE
Technicals: Spot closed above 200 day moving average. 20 day moving average is at 71.35. 50 day moving average is at 71.25.200 day moving average is at 70.60. Daily MACD is in buy zone, implying bottom at 70.73. Important support is at 71.50/71.35 and next important resistance is at 72. Spot closed above its average level of the day.
Intra day supports and resistances for Feb contract are:
PP: 71.69,S1:71.54, S2:71.41, R1:71.82, R2:71.97
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 1.10. Major support is at 1.05. Daily MACD is in sell zone, implying an important top at 1.1240. Weekly MACD is in sell zone, implying important top at 1.1240.
GBP/USD: The pair has turned sideways but still above major moving averages.Daily MACD is in sell zone, implying important top at 1.3070 and weekly MACD is in sell zone, implying important top at 1.3515. Important resistance is at 1.3285. Important support is at 1.2855 and later at 1.27.
USD/YEN: The pair is above major moving averages. Daily MACD is in buy zone, implying important bottom at 108.30. Next important resistance is at 112.40. Important support is at 110.30/108.30.