FX MORNING UPDATE  :

USDINR opened at 73.06 on Friday and the pair traded in the 73.01-73.16 range. Spot USDINR closed at 73.02, loss of 5 ps USD as against prior close of 73.07. RBI reference rate was fixed at 73.07 on 03/09Sep USD/INR closed at 73.19, loss of 1 ps for USD as compared to prior day’s close of 73.20. Sep Euro/INR closed at 86.95, GBP/INR at 101.26 and Yen/INR at 66.63. USDINR fwd premia was trading at around 4.30% p.a. In Sept, there are 13 IPO’S and hence USD inflows may continue to remain robust. US’D decline momentum seems abated. USDINR has to clear 73.40 to rally further to 73.70 and 73.95 levels.

PAIRS RBI REF RATE (03/09)
USDINR 73.07
EURINR 86.76
GBPINR 101.06
JPYINR 66.40

In August, FII’S have net bought Rs 4640 cr in Equity segment and have net bought Rs 12028 cr of debt. In this financial year, FII’S have net sold Rs 2375 Cr worth of Indian Equities and have bought Rs 7865 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 0.52% on Friday. DOW declined 75 points (0.21%).Nikkei was up 2.05% and Hang seng declined 0.72% on Friday.

Euro closed the week at 1.1878, Pound at 1.3868, Yen at 109.71.

Commodities: Gold is now at USD 1830 and WT1Crude at USD 69/Brent at USD 72.45.

Interest rates: USD 10 Yr yield is at 1.32% and 3 m libor closed at 0.12%. Indian 10 yr benchmark yield closed at 6.17%.

Economic news: USD weakness after NFP release did not sustain as the data has mixed indicators. US nonfarm payrolls increased by 235,000 jobs last month, the smallest gain since January. Data for July was revised up to show a whopping 1.053 million jobs created instead of the previously reported 943,000. Unemployment rate fell to 5.2% and wages increased 0.6% m/m. Employment was still down by -5.3m from pre-pandemic level in February 2020.

Indian PMI (services) stood at 56.7 in August compared with 45.4 in July. The gauge expanded after four months. A reading above 50 indicates expansion in business activity. “The latest reading pointed to a marked rate of expansion that was the fastest in one-and-a-half years,” The Composite PMI Output Index, too, rose to 55.4 in August.

Data highlights: – US ISM (services) was strong at 61.7.

-EU PMI (services) dipped to 59 and retail sales declined -2.3% m/m.

-UK PMI (services) dipped to 55.

Monday’s calendar: – German factory orders

USD/INR      73.16 73.01
EUR/USD     1.1878 1.1910 1.1866
GBP/USD     1.3868 1.3893 1.3817
USD/JPY     109.71 110.08 109.59

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1884 1.1903  1.1929    1.1858 1.1839  
GBP/USD 1.3859 1.3901  1.3935    1.3825 1.3783  
USD/JPY 109.79 109.99  110.28    109.50 109.30  
USD/INR 73.06 73.11 73.21   72.96 72.91  

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.1665 1.1910/1.20 DN UP>1.20
GBP/USD 1.3770/1.3670/1.36 1.40 SIDE DN<1.3650
USD/JPY 109.10/108.75 110.80/111.60 UP DN<108.70
USD/INR 72.75 73.40/73.70 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 73.95. 50 day moving average is at 74.25.200 day moving average is at 73.62. Daily MACD is in sell zone, implying top at 74.95. Important resistance is at 73.35/73.55 and important support is at 72.75. Spot closed below its average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 73.21, S1:73.10, S2:73.01, R1:73.30, R2:73.41              

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 73.70/74.10.

Exporters can hedge EURINR receivables exposure at 87.25.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 100 and 200 day moving averages, but above 50 day moving average. Major resistance is at 1.1910/1.20. 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 above 50 and 200 day moving averages, but below 100 day moving average. Daily MACD is in buy zone, implying important bottom at 1.36 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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