FX MORNING UPDATE 

USDINR opened at 74.18 on Friday and the pair traded in the 73.68-74.20 range. Spot USDINR closed at 73.68, loss of 54 ps USD as against prior close of 74.22. RBI reference rate was fixed at 74.14 on 27/08Sep USD/INR closed at 73.89, loss of 54 ps for USD as compared to prior day’s close of 74.43. Sep Euro/INR closed at 86.96, GBP/INR at 101.39 and Yen/INR at 67.14. USDINR fwd premia was trading at around 4.28% p.a. Rupee broke the 74.10 levels and technical stop loss trigger pushed USD lower to 73.68 within an hour. RBI was not seen supporting USD. Indian FX reserves stands at USD 616 bn.

PAIRS RBI REF RATE (27/08)
USDINR 74.14
EURINR 87.22
GBPINR 101.59
JPYINR 67.40

In August, till date,, FII’S have net bought Rs 3543 cr in Equity segment and have net bought Rs 11440 cr of debt. In this financial year, FII’S have net sold Rs 3472 Cr worth of Indian Equities and have bought Rs 7277 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 0.41% on Friday. DOW climbed 242 points (0.69%).Nikkei was down 0.36% and Hang seng declined 0.03% on Friday.

Euro closed the week at 1.1795, Pound at 1.3768, Yen at 109.85.

Commodities: Gold is now at USD 1820 and WT1Crude at USD 68.70/Brent at USD 71.65.

Interest rates: USD 10 Yr yield is at 1.31% and 3 m libor closed at 0.12%. Indian 10 yr benchmark yield closed at 6.25%.

Economic news: Fed Chairman was ambiguous in his speech y’day. While he said that pandemic continuation and slack in labor market are concerns, the economy is strong and significant labor market improvement has happened. He added that if economy evolves broadly as anticipated, QE taper can happen in 2021. His statement are considered dovish and triggered decline in USD and a rally in Equities and commodities.

Data highlights: – US Personal income climbed 1.1% m/m, spending climbed 0.3% m/m and Core PCE index climbed 0.3% m/m.

Monday’s calendar: US pending home sales.

USD/INR      74.20 73.68
EUR/USD     1.1795 1.1803 1.1734
GBP/USD     1.3768 1.3781 1.3679
USD/JPY     109.85 110.28 109.78

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1760 1.1774 1.1794 1.1808 1.1739 1.1726 1.1705
GBP/USD 1.3719 1.3748 1.3798 1.3827 1.3669 1.3640 1.3590
USD/JPY 110.07 110.21 110.38 110.52 109.91 109.76 109.60
USD/INR 73.85 74.02 74.37   73.50 73.33

 MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.1665 1.1845/1.1910 DN UP>1.1910
GBP/USD 1.36 1.3815/1.40 SIDE DN<1.3650
USD/JPY 109.10/108.75 110.80/111.60 UP DN<108.70
USD/INR 73.30 73.95/74.10 DN UP>74.10
USD/CHF 0.91/0.9010 0.9240 UP DN<0.91

Technicals: Spot closed below 20,50 and 100 day major moving averages. 20 day moving average is at 74.25. 50 day moving average is at 74.33.200 day moving average is at 73.65. Daily MACD is in sell zone, implying top at 74.95. Important resistance is at 73.95/74.10 and important support is at 73.30. Spot closed below its average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 74.03, S1:73.64, S2:73.39, R1:74.28, R2:74.67               

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

However on directional basis, suggest the following:

USDINR Imports hedging can be done . USD exports can be hedged on rally to 74.10.

Exporters can hedge EURINR receivables exposure at 87.25.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 50 and 200 day moving averages. Major resistance is at 1.19. Next major support is at 1.1665. Daily MACD is in buy zone, implying an important bottom at 1.1665. Weekly MACD is in sell zone, implying important top at 1.2270.

GBP/USD: The pair is below 50 and 200 day moving averages. Daily MACD is in sell zone, implying important top at 1.3985 and weekly MACD is in sell zone, implying important top at 1.4240. Important support is at 1.36.Important resistance is at 1.40.

USD/YEN: The pair is between major moving averages. Daily MACD is in buy zone, implying important bottom at 109.10. Next important resistance is at 110.80/111.60. Important support is at 109.10/108.70.

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