FX MORNING UPDATE

USDINR opened at 73.26 y’day and the pair traded in the 73.26-72.70 range. Spot USDINR closed at 72.72 , loss of 65 ps for USD as against prior close of 73.37. RBI reference rate was fixed at 73.29 on 01/03Mar USD/INR closed at 73.14, loss of 47 ps for USD as compared to prior day’s close of 73.61. Mar Euro/INR closed at 88.42, GBP/INR at 102.18 and Yen/INR at 68.42.

USDINR reversed its last week losses to 73.78 as Equity markets stabilised and returned for an upbeat rally. Bharti bond flows of USD 1.2 bn may have also contributed to Rupee’s gain to 72.70.

FII’S nett bought Rs 27918 Cr of Indian Equities in Feb (as on 26/2) . FII’S nett sold Rs 692 Cr of Indian debt securities in Feb (as on 26/2) . In this financial year, FII’S have nett bought Rs 258565 Cr of Equities and have sold Rs  30624 Cr in debt. In FY 19-20, FII’s sold Rs 10200 Cr of Equities and 47393 cr of debt.

Benchmark Nifty climbed 2.19% y’day. DOW declined 121 points(0.39%).Nikkei climbed 0.51% and Hang seng climbed 2.70% .

Euro is now at 1.2090,Pound at 1.3961,Yen at 106.80.      

Commodities: Gold is now at USD 1710 and WT1Crude at USD 61.27/Brent at USD 64.09.

Interest rates: USD 10 Yr yield is at 1.48% and 3 m libor closed at 0.23%. Indian 10 yr benchmark yield closed at 6.23%.

Economic news: Indian exports declined 0.3% in Feb to USD 27.67 bn, while imports grew 7% to USD 40.57. Trade deficit stood at USD 12.9 bn in Feb. In April-February, exports contracted 12.32% while imports fell 23.1%, resulting in a $151.4 bn deficit. PMI (services) climbed to 55.3 in Feb.

Data highlights: – US ISM(non mfrg) dipped to 55.3, ADP employment report showed that private sector added 117k jobs.

-EU PMI(services) improved to 45.7 and PPI was flat m/m.

-UK PMI(services) improved to 49.5.

Thursday’s calendar: – US factory orders and weekly jobless claims

-EU retail sales and unemployment rate

-UK PMI(construction)

USD/INR   73.26 72.69
EUR/USD 1.2053 1.2113 1.2043
GBP/USD 1.3934 1.4006 1.3922
USD/JPY 107.04 107.15 106.69

Daily Support/Resistance table

currency pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.2068 1.2093 1.2138 1.2162 1.2023 1.1998 1.1953
GBP/USD 1.3950 1.3978 1.4034 1.4063 1.3894 1.3866 1.3810
USD/JPY 106.97

 

107.25 107.43 107.70 106.79 106.51

 

106.33

 

USD/INR 72.89 73.08 73.45   72.52 72.33  

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.1950 1.2240/1.2350 SIDE UP>1.2240
GBP/USD 1.3760 1.4240 UP SIDE<1.3760
USD/JPY 105.80/104.90 107.15/109.20 UP DN<104.90
USD/INR 73.20/72.80 73.80/74 SIDE DN<72.80,UP>73.80
USD/CHF 0.8870 0.9135 UP DN<0.8870

Technicals: Spot closed above 50,100 day moving averages but still below 200 day moving average. 20 day moving average is at 72.83. 50 day moving average is at 73.08.07.200 day moving average is at 74.15. Daily MACD is in buy zone, implying bottom at 72.30. Important support is at 72.30 and important resistance is at 73.20/73.80 . Spot closed below its average level of the day.

Intra day supports and resistances for Mar contract are:

PP:73.22,S1:72.86, S2:72.59, R1:73.49, R2: 73.85                        

Hedging strategy : Hedging decisions be taken according to comfort and accounting rates.

However on directional basis, suggest the following:

An upside break of 74 could end Rupee’s multi-month upward trend. Expect 72.30-73.80 trading range till either side is broken.

Importer hedging should be done on dips to 72.30 and exports can be sold till 73.80 is not broken. If 73.80 is broken, exporters could wait for a higher level to hedge.

EURINR is delicately poised. Downside break of 87.50 could signal furher losses. Exporters can hedge on uptick to 89 and importers can buy EURINR for hedging till 87.50. If 87.50 is broken on the downside, importers can wait for lower levels to hedge imports.

 CROSS CURRENCY TECHNICALS:

EURO/USDThe pair is below 50 moving average, but above 100 and 200 day moving average. Major resistance is at 1.2150. Major support is at 1.1950. Daily MACD is in buy zone, implying an important bottom at 1.1950. Weekly MACD is in buy zone, implying important bottom at 1.1610.

GBP/USD: The pair is above major moving averages. Daily MACD  is in buy zone, implying important bottom at 1.3565 and weekly MACD is  in buy zone, implying important bottom at 1.2675. Important support is at 1.3760/1.3565 . Important resistance is at 1.4250.

USD/YEN: The pair is above 50 and 200 day major moving averages. Daily MACD is in buy zone, implying important bottom at 104.40. Next important resistance is at 107.20. Important support is at 105.80/104.90.

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