FX – MORNING UPDATE :

USDINR opened at 83.28 Y’day and the pair traded in the 83.27-83.33 range. Spot USDINR closed at 83.32, unchanged for USD as against prior close of 83.32. Market was closed y’day.

RBI reference rate was fixed at 83.32 on 13/11. Nov USD/INR closed at 83.32, loss of 2 ps for USD as compared to prior day’s close of 83.34. Nov Euro/INR closed at 89.10, GBP/INR at 102.07 and Yen/INR at 55.11. 1 year USDINR fwd premia was trading at around 1.52% p.a.  FX reserves climbed by USD 4 bn and stood at USD 590.78 bn as on Nov 3 rd.  

In Nov, FPI’S have sold Rs 5372 Cr of Equities and bought Rs 5254 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 82 points (0.42%) y’day. US S&P climbed 84 points (1.91%) . Nikkei climbed 0.43% and Hang Seng declined 0.22%.

Euro is now at 1.0873, Pound at 1.2483, Yen at 150.66.

Commodities: Gold is now at USD 1963 and WT1Crude at USD 78/Brent at USD 82.50.

Interest rates: USD 10 Yr yield is at 4.44% and 3 m libor closed at 5.64%. Indian 10 yr benchmark yield closed at 7.29%.

Economic news: US CPI slowed from 3.7% yoy to 3.2% yoy in October, below expectation of 3.3% yoy. CPI core (less food and energy) fell from 4.1% yoy to 4.0% yoy, below expectation of being unchanged at 4.1% yoy. That’s the lowest core CPI reading since September 2021. Energy index was down -4.5% yoy. Food index was up 3.3% yoy.

Germany’s ZEW Economic Sentiment soared to 9.8 in November, far surpassing the anticipated 4.9, signaling increasing optimism. ZEW President, noted that while current economic conditions are still challenging, there’s growing optimism. He added, “These observations support the impression that the economic development in Germany has bottomed out.”

The increase in economic expectations is supported by a more positive view of the German industrial sector and both domestic and foreign stock markets. Additionally, “inflation and short- and long-term interest rates also appear to have reached turning points in expectations,” he added.

Euro and Pound rallied against USD after US inflation data.

Data highlights: – US CPI climbed 3.2% y/y and was flat m/m. Core CPI climbed 0.2% m/m.

-EU and German Zew surveys improved significantly to 13.8 and 9.8 respectively.

-UK unemployment rate is at 4.2% and claimant count change climbed to 17.8k.

Wednesday’s calendar : US PPI, retail sales

-EU Industrial production

-UK CPI, RPI and PPI(output)

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 83.25. 50 day moving average is at 83.17.200 day moving average is at 82.52. 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: 83.31, S1:83.29, S2:83.27, R1:83.33, 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 above all major moving averages. Major resistance is at 1.0940. Next major support is at 1.0675. 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 1.2185. Important resistance is at 1.2535.

USD/YEN: The pair is above 50 and 200 day major averages. Daily MACD is in sell zone, implying important top at 152. Important resistance is at 152 and support is at 148.60/146.