FX – MORNING UPDATE :

USDINR opened at 83.30 y’day and the pair traded in the 83.20-83.33 range. Spot USDINR closed at 83.25, loss of 3 ps for USD as against prior close of 83.28.

RBI reference rate was fixed at 83.30 on 04/01. Jan USD/INR closed at 83.32 y’day, loss of 4 ps for USD as compared to prior day’s close of 83.36. Jan Euro/INR closed at 91.33, GBP/INR at 105.83 and Yen/INR at 58.04. 1 year USDINR fwd premia was trading at around 1.75% p.a.  FX reserves stood at USD 620.44 bn as on Dec 22 nd.  FX reserves climbed USD 4.47 bn, last week.

In Dec, FPI’S have bought Rs 56390 Cr of Equities and bought Rs 18392 Cr of debt . In this calendar year, FII’S have net bought Rs 172853 Cr of Equities and have net bought Rs 70489 Cr of debt.

Benchmark Nifty climbed 141 points (0.66%) y’day. US S&P declined 16 points y’day (0.34%) y’day. Nikkei declined 0.23% and Hang Seng declined 0.94% y’day..

Euro is now at 1.0941, Pound at 1.2692, Yen at 144.78.

Commodities: Gold is now at USD 2045 and WT1Crude at USD 72.50/Brent at USD 78.

Interest rates: USD 10 Yr yield is at 4% and 3 m libor closed at 5.59%. Indian 10 yr benchmark yield closed at 7.22%.

Economic news: US ADP private employment grew 164k in December, above expectation of 130k. UK PMI Services was finalized at 53.4 in December, up from November’s 50.9, and the highest reading since last June. Eurozone PMI Services was finalized at 48.8 in December, up slightly from November’s 48.7, a 5-month high. PMI Composite was finalized at 47.6, unchanged from prior month’s reading, indicating continued contraction in the broader economy.

Data highlights: – US ADP employment report showed that private sector added 164 k jobs, and weekly jobless claims declined to 202k.

-EU PMI(services) climbed to 48.8.

-UK PMI(services) climbed to 53.4.

Friday’s calendar : US NFP, ISM(services) and factory orders

-EU CPI

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed below 20 and  50 day average but above 200 day moving averages.20 day moving average is at 83.25. 50 day moving average is at 83.25.200 day moving average is at 82.69. Daily MACD is in buy zone. Important support is at 82.80 and important resistance is at 83.35/83.45. Spot closed below the average level of the day.

Intraday supports and resistances for Jan contract are:

PP: 83.33, S1:83.27, S2:83.21, R1:83.39, R2:83.45.             

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

However on directional basis, suggest the following:

USD exports be hedged at 83.35/83.40. Imports be hedged at 82.80/82.65 for 3 months.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is above major moving averages. Major resistance is at 1.1275. 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 buy zone, implying important bottom at 1.2610 and weekly MACD is in buy zone, implying important bottom at 1.25. Important support is at 1.2610/1.25. Important resistance is at 1.2845/1.30.

USD/YEN: The pair is below major moving averages. Daily MACD is in sell zone, implying important top at 151.75. Important resistance is at 146.60/149.70 and support is at 141.