FX MORNING UPDATE

04/07/2018

                                                                                       

USDINR opened gap up at 68.89 Y’day and the pair traded in the 68.56-68.96 range. Spot USDINR closed at 68.57, loss of 22 ps for USD as against prior close of 68.79.RBI reference rate was fixed at 68.69. Rupee recovered from 68.96 on RBI intervention. July USD/INR closed at 68.80, loss of 19 ps for USD as compared to prior day’s close of 68.99. July Euro/INR closed at 80.32, GBP/INR at 90.82 and Yen/INR at 62.17.

FII’S have sold Rs 3637 Cr of Indian Equities in June till date . FII’S have sold 10043 Cr of Indian debt securities in June till date . On a cumulative basis, FII’S have sold Rupees 200 Cr of Indian Equities till date for this calendar year and have sold  Rupees 41356 Cr of Indian debt in this calendar year till date.

Benchmark Nifty climbed 0.40% y’day. DOW declined 132 points (0.54%) Y’day.Nikkei declined 0.12%  and Hang seng declined 1.41% y’day.

Euro is now at 1.1666, Pound at 1.3203,Yen at 110.40.    

Commodities: Gold is now at USD 1258 and WT1Crude at USD 74.62.

Interest rates: USD 10 Yr yield is at 2.84% and 3 m libor closed at 2.36%. Indian 10 yr benchmark yield closed at 7.88%.        

Economic news: Chinese stocks and Yuan recovered after Pboc hinted at maintaining stability of exchange rate. Pboc Governor Yi acknowledged the fluctuation in the exchange rate and said the central bank is “pay closing attention”. He attributed to the decline of Chinese Yuan to strength of the US Dollar, external uncertainties and some procyclical behaviors.

He also noted that the “managed floating exchange rate system” is based on market supply and demand. And “practice over the years has proven that this system must be effective and must be adhered to”. At the same time, China is committed to deepen the reform of exchange rate marketization and use sufficient policy tools to ” maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.”                         

USDCNY’s rally of more than +4% over the past two weeks has raised speculations about China’s retaliation against the US-induced trade tensions. However exceesive Yuan weakness could trigger large capital outflows as evidenced in 2015.

 

                                                                                                                                                 

Data Highlights : -US factory orders climbed 0.4% m/m.

-EU retail sales was flat m/m.

-UK PMI(construction) climbed to 53.1.

Wednesday’s calendar: – EU PMI(services) and UK PMI(services)

USD/INR   68.96 68.56
EUR/USD 1.1666 1.11699 1.1590
GBP/USD 1.3203 1.3211 1.3094
USD/JPY 110.40 111.06 110.48

Daily Support/Resistance table

CurrencyPairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1651 1.1681 1.1703 1.1733 1.1629 1.1599 1.1577
GBP/USD 1.3172 1.3229 1.3264 1.3321 1.3137 1.3080 1.3045
USD/JPY 110.65

 

110.90 111.38 111.63

 

110.17 109.72 109.44

 

USD/INR 68.69 68.83 69.10   68.42 68.28  

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Curency Pair Supports Resistances Trend Remarks
EURO/USD 1.1508 1.1853/1.1960 DN SIDE>1.1853
GBP/USD 1.3050 1.3475/1.3550 DN SIDE>1.3475
USD/JPY 109.35/108.10 110.90/111.40 UP DN<108.10
USD/INR 67.80 69.10 UP SIDE<67.70
USD/CHF 0.98/0.9650 1.0060 UP  DN <0.9785

Technicals: Spot closed above 100 and 200 day major moving averages. 20 day moving is at 67.97. 50 day moving average is at 67.60. 200 day moving average is at 65.32. Daily MACD is in buy zone, implying bottom at 66.85 . Important support zone is at 67.80 and later at 66.85. Important resistance is at 69.10. Spot closed below its average level of the day.  

Intra day supports and resistances for July contract are:

PP: 68.92,S1:68.65, S2:68.50, R1:69.07, R2:69.34.                                                              

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 1.1850 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 1.3050 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 1.3475 and later at 1.3550. Important support is at 1.3050.     

USD/YEN: The pair is above major moving averages. Daily MACD is in buy zone, implying important bottom at 109.35. Next important support is at 108.10. Important resistance is  110.92 and later at 111.40.

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