FX – MORNING UPDATE :

USDINR opened at 83.26 y’day and the pair traded in the 83.255-83.33 range. Spot USDINR closed at 83.31, gain of 5 ps for USD as against prior close of 83.26.

RBI reference rate was fixed at 83.28 on 01/11. Nov USD/INR closed at 83.37, gain of 7 ps for USD as compared to prior day’s close of 83.30. Nov Euro/INR closed at 88.01, GBP/INR at 101.19 and Yen/INR at 55.44. 1 year USDINR fwd premia was trading at around 1.65% p.a.  FX reserves declined by USD 2.36 bn and stood at USD 583.50 bn as on Oct 20 th.  Foreign Currency assets decreased by USD 4.15 bn last week, due to USD rally.

In Oct, FPI’S have sold Rs 17488 Cr of Equities and bought Rs 5221 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 90 points (0.47%) Y’day. US S&P climbed 44 points (1.05%) . Nikkei climbed 2.36% and Hang Seng declined 0.09%.

Euro is now at 1.0566, Pound at 1.2123, Yen at 149.65.

Commodities: Gold is now at USD 1986 and WT1Crude at USD 81/Brent at USD 85.50.

Interest rates: USD 10 Yr yield is at 4.71% and 3 m libor closed at 5.65%. Indian 10 yr benchmark yield closed at 7.36%.

Economic news: Fed left rates on hold and Fed Chairman sounded less hawkish. He said that while Fed has a long way to go to reach 2% inflation target, he also cited that surging yields have tightened financial conditions and there are emerging risks to economy. While the Fed is not expected to hike rates further, it is also expected to keep rates higher for longer, pressuring the economy as it moves to curb high inflation.

India Manufacturing Purchasing Managers’ Index stood at 55.5 in October, compared with 57.5 in September. This is the lowest reading in 8 months. GST Collections surged 13% y/y to 1.72 lac Cr. Average gross monthly GST collection in FY 2023-24 now stands at Rs 1.66 lakh crore, which is 11 per cent higher compared to the previous financial year.

Data highlights: – US ISM(mfrg) declined to 46.7, construction spending climbed 0.4% m/m. ADP employment report showed that private sector added only 113k jobs last month.

-UK PMI(mfrg-final) showed decline to 44.8.

Monday’s calendar : – US Weekly jobless claims and factory orders.

-EU PMI(mfrg-final)

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 83.23. 50 day moving average is at 83.08.200 day moving average is at 82.45. Daily MACD is in sell zone. Important support is at 83.03/82.80 and important resistance is at 83.35. Spot closed above the average level of the day.

Intraday supports and resistances for Nov contract are:

PP: 83.30, S1:83.28, S2:83.26, R1:83.32, R2:83.34.             

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 83.10 for 3 months.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 100/200 day moving averages. Major resistance is at 1.0695/1.0815. Next major support is at 1.0450. 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 1.2330/1.2440.

USD/YEN: The pair is above 50 and 200 day major averages. Daily MACD is in sell zone, implying important top at 150.80. Important resistance is at 150.80 and support is at 147.50/146.50.