FX – MORNING UPDATE :

USDINR opened at 83.21 on Friday and the pair traded in the 83.21-83.31 range. Spot USDINR closed at 83.28, gain of 2 ps for USD as against prior close of 83.26.

RBI reference rate was fixed at 83.27 on 03/11. Nov USD/INR closed at 83.30, unchanged for USD as compared to prior day’s close of 83.30. Nov Euro/INR closed at 88.79, GBP/INR at 101.86 and Yen/INR at 55.72. 1 year USDINR fwd premia was trading at around 1.62% p.a.  FX reserves climbed by USD 2.5 bn and stood at USD 586 bn as on Oct 27 th.  

In Nov, FPI’S have sold Rs 2979 Cr of Equities and bought Rs 1185 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 climbed 97 points (0.51%) on Friday. US S&P climbed 40 points (0.94%) . Nikkei climbed 1.1% and Hang Seng climbed 2.52%.

Euro is now at 1.0730, Pound at 1.2378, Yen at 149.38.

Commodities: Gold is now at USD 1992 and WT1Crude at USD 80/Brent at USD 85.

Interest rates: USD 10 Yr yield is at 4.57% and 3 m libor closed at 5.67%. Indian 10 yr benchmark yield closed at 7.32%.

Economic news: US non-farm payroll employment grew 150k in October, below expectation of 172k. That’s well below average monthly gain of 258k over the prior 12 months.Unemployment rate rose from 3.8% to 3.9%, above expectation of being unchanged at 3.8%. Participation rate dropped from 62.8% to 62.7%.Average hourly earnings rose 0.2% mom, below expectation of 0.3% mom. Over the 12 months, average hourly earnings rose 4.1% yoy.

In response to disappointing employment data, US Yields plunged to 4.55%, signaling a shift in investor expectations on future rate path. Equities surged as yields declined.

US ISM (non mfrg) data was also below expectation at 51.8. ISM said: “The past relationship between the Services PMI and the overall economy indicates that the Services PMI for October (51.8 percent) corresponds to a 0.7-percent increase in real gross domestic product (GDP) on an annualized basis.”

UK PMI Services index was finalized at to 49.5 in October up fractionally from 49.3 in September, lingering in contraction territory for the third consecutive month. PMI Composite showed a minor improvement to 48.7 from an 8-month low of 48.5.

Data highlights: – US ISM(services) declined to 51.8, below consensus of 53.2.

-EU unemployment rate climbed to 6.5%.

-UK PMI(services-final) was reported at 49.5.

Monday’s calendar : – EU PMI(services-final) and sentix investor confidence

-UK PMI(construction)

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 83.09.200 day moving average is at 82.47. Daily MACD is in buy 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: 83.29, S1:83.26, S2:83.23, R1:83.32, R2:83.35.             

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, but above 50 day average. Major resistance is at 1.08. Next major support is at 1.0510. 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 100 and 200 day averages, but above 50 day average. 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 1.2070/1.2035. Important resistance is at 1.2440/1.2535.

USD/YEN: The pair is above 50 and 200 day major averages. Daily MACD is in sell zone, implying important top at 151.75. Important resistance is at 151.75 and support is at 148.60/146.