USDINR opened at 72.48 on Friday and the pair traded in the 72.32-72.49 range. Spot USDINR closed at 72.43, loss of 15 ps for USD as against prior close of 72.58. RBI reference rate was fixed at 72.45 on 28/05. June USD/INR closed at 72.81, loss of 8 ps for USD as compared to prior day’s close of 72.89. June Euro/INR closed at 88.68, GBP/INR at 103.17 and Yen/INR at 66.25. USDINR fwd premia was trading at around 5.25% p.a.

In May till date, FII’S have net sold Rs 9341 cr in Equity segment and have net bought Rs 1805 cr of debt. In this financial year, FII’S have net bought Rs 449 Cr worth of Indian Equities and have bought Rs 704 Cr worth of Indian debt. In 2020-21 financial Year, FII’S nett bought Rs 2,74,203 Cr of Equities and have sold Rs  42820 Cr in debt.

Benchmark Nifty climbed 0.64% on Friday. DOW climbed 141 points (0.41%).Nikkei climbed 2.10% and Hang seng climbed 0.08%.

Euro closed the week at 1.2194, Pound at 1.4189, Yen at 109.86.  

Commodities: Gold is now at USD 1903 and WT1Crude at USD 66.60/Brent at USD 69.

Interest rates: USD 10 Yr yield is at 1.58% and 3 m libor closed at 0.155%. Indian 10 yr benchmark yield closed at 6%.

Economic news: US Personal income declined more than expected, but excluding transfer payments, income rose by 1.1%. Wages and salaries have now posted 12 months of consecutive gains, driving the level 4.3% off of where it was prior to the pandemic in February 2020. The PCE deflator, which is the Fed’s preferred measure of inflation, rose 0.6 compared to March. The year-over-year rate jumped to 3.6%. Excluding food and energy, core prices rose 0.7%, pushing the year-over-year rate to 3.1%, the highest since the early 1990s. Steep rise in PCE could be attributed to base effect.

Eurozone Economic Sentiment Indicator rose strongly to 114.5 in May, up from 110.5, above expectation of 112.1. The index scored markedly above its long-term average and pre-pandemic level. 

Data highlights: – US personal income declined 13.1% m/m, spending climbed 0.5% m/m and Core PCE index climbed 0.7% m/m.

Monday’s calendar: – No major data release.

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed below 50 and 200 day major moving averages. 20 day moving average is at 73.32. 50 day moving average is at 73.52.200 day moving average is at 73.59. Daily MACD is in sell zone, implying top at 75.30. Important support is at 72.25 and important resistance is at 72.75/73.20. Spot closed above its average level of the day.

Intraday supports and resistances for June contract are:

PP: 72.82, S1:72.64, S2:72.48, R1:72.98, R2: 73.16                       

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

However on directional basis, suggest the following:

Expect 72.25-72.75 trading range till either side is broken.

Imports hedging should be done on dips and exports hedging can be done later on rally.

Importers can hedge EURINR exposure now at 87.50. Receivables can be hedged at 88.90.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is above 50 and 200 day moving averages. Major resistance is at 1.2250/1.2330. Next major support is at 1.2050/1.1990. Daily MACD is in sell zone, implying an important top at 1.2250. Weekly MACD is in buy zone, implying important bottom at 1.17.

GBP/USD: The pair is above 200 day moving average. Daily MACD is in sell zone, implying important top at 1.4240 and weekly MACD is in buy zone, implying important bottom at 1.3665. Important support is at 1.40/1.38.Important resistances is at 1.4240.

USD/YEN: The pair is above 200 day major moving average. Daily MACD is in buy zone, implying important bottom at 108.35. Next important resistance is at 111. Important support is at 108.35.

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