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FX – MORNING UPDATE :

FX – MORNING UPDATE :
  • By Goodwill
  • 106 Comments
  • December 15, 2023

FX – MORNING UPDATE :

USDINR opened at 83.28 y’day and the pair traded in the 83.26-83.36 range. Spot USDINR closed at 83.31, loss of 9 ps for USD as against prior close of 83.40.

RBI reference rate was fixed at 83.35 on 14/12. Dec USD/INR closed at 83.33 y’day, loss of 12 ps for USD as compared to prior day’s close of 83.45. Dec Euro/INR closed at 91.10, GBP/INR at 105.58 and Yen/INR at 59.05. 1 year USDINR fwd premia was trading at around 1.73% p.a.  FX reserves stood at USD 604 bn as on Dec 1 st.  FX reserves climbed USD 6 bn.

PAIRS

RBI REF RATE (14/12)

USDINR

83.35

EURINR

90.86

GBPINR

105.35

JPYINR

58.82

In Dec, FPI’S have bought Rs 16761 Cr of Equities and bought Rs 5596 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 256 points (1.23%) y’day. US S&P climbed 12 points (0.26%) y’day. Nikkei declined 0.80% and Hang Seng climbed 0.74% y’day.

Euro is now at 1.0985, Pound at 1.2755, Yen at 142.13.

Commodities: Gold is now at USD 2032 and WT1Crude at USD 72/Brent at USD 77.

Interest rates: USD 10 Yr yield is at 3.96% and 3 m libor closed at 5.64%. Indian 10 yr benchmark yield closed at 7.19%.

Economic news: Global and Indian Equities surged on optimism over USD rate cuts in 2024. This was fueled by Fed meeting outcome.

USD declined further against Euro and Pound as both central bank statements were in contrast to Fed’s dovish stance. Both these banks pushed back against rate cut expectations.

BoE kept Bank Rate unchanged at 5.25%.BOE reiterated its stance that “monetary policy is likely to be restrictive for an extended period of time.” This suggests continued cautious approach towards easing monetary conditions, likely due to persistent inflationary pressures. The Bank further emphasized that “Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures,” indicating readiness to adjust policy should inflation not moderate as expected.

ECB kept interest rates unchanged, maintaining the main refinancing rate at 4.50% and the deposit rate at 4.00%, as was widely anticipated. In a significant update, ECB substantially lowered its headline inflation forecast for 2024 from 3.2% to 2.7%. On the growth front, ECB’s projections indicate modest economic performance, with growth averaging 0.6% for 2023, 0.8% for 2024. ECB reiterated that the current interest rates are positioned to substantially contribute to bringing inflation back to its target, provided they are “maintained for a sufficiently long duration.” The ECB plans to continue following a “data-dependent approach” to determine the “level and duration” of policy restrictions.

ECB President in her post-meeting press conference, made it clear that the governing council did not discuss a rate cut in their meeting. She underlined the ECB’s vigilance, asserting the need to “keep our guard up” and closely monitor data to ascertain if the recent decline in inflation is sustainable.

Data highlights: – US Weekly jobless claims dipped to 202k, retail sales climbed 0.3% m/m.

 Friday’s calendar : – US industrial production

-EU PMI(mfrg-flash) and PMI(services-flash)

-UK PMI(mfrg-flash) and PMI(services-flash)

USD/INR

 

  

 83.36

83.26

EUR/USD

1.0985

  

1.1010

1.0879

GBP/USD

1.2755

  

1.2795

1.2612

USD/JPY

142.13

  

142.91

140.97

Daily Support/Resistance table

Currency Pairs

Pivot

R1

R2

R3

S1

S2

S3

EURO/USD

1.0961

1.1043

1.1091

1.1173

1.0912

1.0831

1.0782

GBP/USD

1.2726

1.2840

1.2909

1.3023

1.2657

1.2543

1.2475

USD/JPY

142.05

143.13

143.99

145.07

141.19

140.11

139.25

USD/INR

83.31

83.36

83.41

 

83.26

83.21

 

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair

Supports

Resistances

Trend

Remarks

EURO/USD

1.0735/1.0665

1.0960/1.1018

UP

DN<1.0735

GBP/USD

1.25/1.2325

1.2745

SIDE

DN<1.25

USD/JPY

141.50

147.15/149.70

DN

UP>149.70

USD/INR

83.03/82.80

83.47

UP

SIDE<83.02

USD/CHF

0.8650

0.8820

DN

UP>0.8820

Technicals: Spot closed above 50 day average and 200 day moving averages.20 day moving average is at 83.34. 50 day moving average is at 83.26.200 day moving average is at 82.62. Daily MACD is in sell zone. Important support is at 83.03/82.80 and important resistance is at 83.48. Spot closed at the average level of the day.

Intraday supports and resistances for Dec contract are:

PP: 83.34, S1:83.29, S2:83.25, R1:83.38, R2:83.43.             

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

However on directional basis, suggest the following:

USD exports be hedged at 83.45/83.50. Imports be hedged at 83.05 for 3 months.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is above 50, but below 100 and 200 day major moving averages. Major resistance is at 1.0960/1.1018. Next major support is at 1.0735/1.0665. Daily MACD is in buy zone, implying an important bottom at 1.0735. Weekly MACD is in buy zone, implying important bottom at 1.0450.

GBP/USD: The pair is above all major moving averages. Daily MACD is in sell zone, implying important top at 1.2735 and weekly MACD is in buy zone, implying important bottom at 1.25. Important support is at 1.25/1.2325. Important resistance is at 1.2745.

USD/YEN: The pair is below 50,100 day major averages, but above 200 day average. Daily MACD is in sell zone, implying important top at 151.75. Important resistance is at 147.15/149.70 and support is at 141.50.

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