FX MORNING UPDATE :

USDINR opened at 74.16 y’day and the pair traded in the 74.15-74.28 range. Spot USDINR closed at 74.18, loss of 1 ps for USD as against prior close of 74.19. RBI reference rate was fixed at 74.15 on 04/08Aug USD/INR closed at 74.29, loss of 5 ps for USD as compared to prior day’s close of 74.34. Aug Euro/INR closed at 88.12, GBP/INR at 103.41 and Yen/INR at 67.89. USDINR fwd premia was trading at around 4.20% p.a.

PAIRS RBI REF RATE (05/08)
USDINR 74.26
EURINR 87.88
GBPINR 103.09
JPYINR 67.69

In July, FII’S have net sold Rs 10188 cr in Equity segment and have net sold Rs 758 cr of debt. In this financial year, FII’S have net sold Rs 1137 Cr worth of Indian Equities and have sold Rs 4893 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 0.22% y’day. DOW climbed 271 points (0.78%).Nikkei was up 0.21%  and Hang seng declined 0.84% y’day.

Euro is now at 1.1825, Pound at 1.3918, Yen at 108.83.

Commodities: Gold is now at USD 1804 and WT1Crude at USD 68.95/Brent at USD 71.10.

Interest rates: USD 10 Yr yield is at 1.23% and 3 m libor closed at 0.13%. Indian 10 yr benchmark yield closed at 6.20%.

Economic news: BoE left Bank rate unchanged at 0.10% by unanimous vote. Asset purchase target was held at GBP 895B, by 7-1 vote. BoE also said that GDP is expected to grow by around 3% in Q3, with just a “small negative impact from recent developments in the pandemic”. GDP is projected to “recover further over the remainder of the year”, and reaches its pre pandemic level in 2021 Q4.

ECB said Eurozone economy is “on track for strong growth” in Q3. Manufacturing is expected to “perform strongly” despite supply bottlenecks. Reopening is supporting a “vigorous bounce-back” in services sector. However, Delta variant “could dampen this recovery in services, especially in tourism and hospitality.”

Data highlights: – US Weekly jobless claims dropped to 385k and German factory orders rose 4.1% m/m.

-UK PMI(construction) declined to 58.7.

Friday’s calendar: – US Nonfarm payrolls

-German industrial production

USD/INR      74.28 74.15
EUR/USD     1.1825 1.1857 1.1829
GBP/USD     1.3918 1.3950 1.3873
USD/JPY     108.83 109.79 109.40

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1840 1.1851 1.1869 1.1880 1.1823 1.1811 1.1794
GBP/USD 1.3917 1.3961 1.3994 1.4038 1.3884 1.3840 1.3808
USD/JPY 109.65 109.90 110.04 110.29 109.51 109.26 109.12
USD/INR 74.20 74.25 74.33   74.12 74.07  

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.1755 1.1975 DN UP>1.2050
GBP/USD 1.3730/1.3570 1.40 UP DN<1.3730
USD/JPY 109 110.60 SIDE DN<109
USD/INR 74.15/73.90 74.56/74.95 DN UP>74.56
USD/CHF 0.8925 0.9130 DN UP>0.9180

Technicals: Spot closed above all major moving averages. 20 day moving average is at 74.50. 50 day moving average is at 73.93.200 day moving average is at 73.58. Daily MACD is in sell zone, implying top at 74.95. Important support is at 74.05/73.90 and important resistance is at 74.32/74.40/74.55. Spot closed below its average level of the day.

Intraday supports and resistances for Aug contract are:

PP: 74.33, S1:74.21, S2:74.13, R1:74.41, R2:74.53                  

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

However on directional basis, suggest the following:

USDINR Imports hedging should be done on dips to 73.90 . USD exports can be hedged.

Exporters can hedge EURINR receivables exposure at 88.30.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 50 and 200 day moving averages. Major resistance is at 1.1975. Next major support is at 1.1815/1.1755. Daily MACD is in buy zone, implying an important bottom at 1.1755. Weekly MACD is in sell zone, implying important top at 1.2270.

GBP/USD: The pair is above 200 day moving average. Daily MACD is in buy zone, implying important bottom at 1.3570 and weekly MACD is in sell zone, implying important top at 1.4240. Important support is at 1.3740/1.3570.Important resistance is at 1.4010.

USD/YEN: The pair is above 200 day major moving average. Daily MACD is in sell zone, implying important top at 110.60. Next important resistance is at 110.60/111.60. Important support is at 109.

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