FX MORNING UPDATE

FX MORNING UPDATE                                                                                      

USDINR opened at 72.47 Y’day and the pair traded in the 72.43-73.34 range. Spot USDINR closed at 73.30 , gain of 57 ps for USD as against prior close of 72.73. RBI reference rate was fixed at 72.87 y’day. March USD/INR closed at 73.54, gain of 67 ps for USD as compared to prior day’s close of 72.87. March Euro/INR closed at 81.75, GBP/INR at 94 and Yen/INR at 68.20.

FII’S nett bought  Rs 1819 Cr of Indian Equities in Feb till date . FII’S have nett bought Rs 2096 Cr of Indian debt securities in Feb till date.

Benchmark Nifty climbed 1.53% y’day. DOW declined 785 points (2.94%) Y’day. Nikkei declined 1.22% and Hang seng declined 0.03% y’day.

Euro is now at 1.1168,Pound at 1.2820,Yen at 107.30.     

Commodities: Gold is now at USD 1644 and WT1Crude at USD 47.70/Brent at USD 52.40.

Interest rates: USD 10 Yr yield is at 0.97% and 3 m libor closed at 1.71%. Indian 10 yr benchmark yield closed at 6.37%.

Economic news: RBI issued a statement saying that they are watching the financial market developments very carefully and stands ready to act appropriately. However, they have refrained from intervention till now. Rupee is down close to two rupees in the last few sessions.

G7 finance ministers and central bank policymakers said on Tuesday they were “ready to take actions, including fiscal measures as appropriate, to aid in the response to the virus and support the economy” amid the coronavirus outbreak, according to a statement. The statement disappointed for lack of details and coordinated response.                     

Fed cuts rates by 50 bps in an emergency meeting. Fed statement said that “The fundamentals of the U.S. economy remain strong,” “However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent.” Global stocks shrugged off rate cut and focussed on implications of Corona virus. US 10 Year treasury yield slumped below 1%.

The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.

Data highlights : – US ISM (mfrg) dipped marginally to 50.1.

-EU PMI(mfrg) remained in contraction mode at 49.2 and UK PMI(mfrg) was reported at 51.7.

-EU CPI climbed 1.2% y/y, in line with expectation. PPI climbed 0.4% m/m. Unemployment rate was at 7.4%.

-UK PMI(construction) climbed to 52.6.

Wednesday’s calendar:- US ADP employment report and ISM( non mfrg)

-German retail sales, EU retail sales and PMI(services)

-UK PMI(services)

USD/INR   73.34 72.43
EUR/USD 1.1168 1.1212 1.1096
GBP/USD 1.2820 1.2844 1.2759
USD/JPY 107.30 108.51 106.86

 

                                                                                                                                               

Daily Support/Resistance table

CurrencyPairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1161 1.1226 1.1277 1.1342 1.1110 1.1045 1.0994
GBP/USD 1.2808 1.2857 1.2893 1.2942 1.2772 1.2723 1.2687
USD/JPY 107.48

 

108.10 109.14 109.76 106.45 105.82 104.79

 

USD/INR 73.02 73.61 73.93   72.70 72.11

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Curency Pair Supports Resistances Trend Remarks
EURO/USD 1.09/1.0780 1.11 SIDE UP>1.11
GBP/USD 1.27 1.3070/1.3270 SIDE UP>1.3070
USD/JPY 107.65/106.50 112.40 DN UP>110
USD/INR 72.45/72.25 74 UP DN<71.55
USD/CHF 0.96 0.9840 SIDE UP>0.9840

Technicals: Spot closed above 200 day moving average. 20 day moving average is at 71.64. 50 day moving average is at 71.42.200 day moving average is at 70.70. Daily MACD is in buy zone, implying bottom at 70.73. Important support is at 72.45/72.25 and next important resistance is at 74. Spot closed above its average level of the day.  

Intra day supports and resistances for March contract are:

PP: 73.26,S1:72.92, S2:72.32, R1:73.87, R2:74.20                                     

Hedging strategy for USD/INR: Hedging decisions be taken according to comfort and accounting rates.

                                                                                                                       

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is between major moving averages. Next Major resistance is at 1.11. Major support is at 1.09 and later at 1.0775. Daily MACD is in buy zone, implying an important bottom at 1.0775. Weekly MACD is in sell zone, implying important top at 1.1240.

GBP/USD: The pair has turned sideways but still above major moving average.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 1.3070. Important support is at 1.27.

USD/YEN: The pair is below major moving averages. Daily MACD is in sell zone, implying important top at 112.20. Next important resistance is at 112.40. Important support is  at 107.65/106.50.

 

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