11/06/2018

FX MORNING UPDATE                                                                                      

USDINR opened gap up at 67.51 on Friday and the pair traded in the 67.43-67.78 range. Spot USDINR closed at 67.50, gain of  38 ps for USD as against prior close of 67.12.RBI reference rate was fixed at 67.52. Rupee declined on heavy USD buying by foreign banks. RBI stepped to stem Rupee fall, as they sold USD at 67.75+. June USD/INR closed at 67.67, gain of 41 ps for USD as compared to prior day’s close of 67.26. June Euro/INR closed at 79.52, GBP/INR at 90.70 and Yen/INR at 61.93.

FII’S have bought Rs 2756 Cr of Indian Equities in June till date . FII’S have sold 475 Cr of Indian debt securities in June till date . On a cumulative basis, FII’S have bought Rupees 6194 Cr of Indian Equities till date for this calendar year and have sold  Rupees 31788 Cr of Indian debt in this calendar year till date.

Benchmark Nifty closed flat on Friday. DOW climbed 75 points (0.30%) on Friday.Nikkei declined 0.56%  and Hang seng declined 1.76% on Friday.

Euro closed the week at 1.1770, Pound at 1.3407,Yen at 109.55.

Commodities: Gold is now at USD 1303 and WT1Crude at USD 65.57.

Interest rates: USD 10 Yr yield is at 2.94% and 3 m libor closed at 2.36%. Indian 10 yr benchmark yield closed at 7.95%.        

Economic news: G-7 summit ended in confusion as US President refused to endorse joint communication agreed before his departure from Canada.  It’s reported that G7 leaders confronted US President with trade statistics to persuade him from imposing tariffs on the allies. But US President stood firm with his stance victimizing the US in international trade, countering with his own set of numbers. 

Euro climbed higher on hope that ECB may take a call to end asset program in its upcoming meeting.                                                                                                                  

ECB Chief economist has noted “there is growing evidence that labour market tightness is translating into a stronger pick-up in wage growth”. And, signals showing the convergence of inflation towards our aim have been improving, and both the underlying strength in the euro area economy and the fact that such strength is increasingly affecting wage formation supports our confidence that inflation will reach a level of below, but close to, 2% over the medium term.”

Fed is expected to hike rate in its meeting this week. Focus is on FOMC economic projections.

Bank of Japan is also meeting this week.

Data Highlights: -German industrial production declined -1% m/m.

Monday’s calendar: – UK industrial and manufacturing production.

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed above 100 and 200 day major moving averages. 20 day moving is at 67.63. 50 day moving average is at 66.63. 200 day moving average is at 64.66. Daily MACD is in sell zone, implying top at 68.42 . Important support zone is at 66.85. Important resistance is  at 67.80 and later at 68.40. Spot closed below its average level of the day.  

Intra day supports and resistances for June contract are:

PP: 67.18,S1:67.09, S2:66.92, R1:67.35, R2:67.44.

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

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below all major moving averages. Next Major resistance is at 1.1840 and later at 1.1960. Major support is at 1.1508. Daily MACD is in buy zone, implying an important bottom at 1.1508. Weekly MACD is in sell zone, implying important top at 1.2560.

GBP/USD: Trend is bearish in daily chart. Daily MACD  is in buy zone, implying important bottom at 1.3205 and weekly MACD is  in sell zone, implying important top at 1.4375. The pair is trading below all major moving averages. Important resistance is at 1.3450 and later at 1.3550. Important support is at 1.3205 and later at 1.3050.          

USD/YEN: The pair is above major moving averages. Daily MACD is in sell zone, implying important top at 111.40. Important support is at 108.10. Important resistance is  111.40 and later at 113.75.