FX MORNING UPDATE 

USDINR opened at 73.70 y’day and the pair traded in the 73.66-73.93 range. Spot USDINR closed at 73.86, gain of 25 ps USD as against prior close of 73.61. RBI reference rate was fixed at 73.80 on 22/09Sep USD/INR closed at 73.93, gain of 19 ps for USD as compared to prior day’s close of 73.74. Sep Euro/INR closed at 86.74, GBP/INR at 100.88 and Yen/INR at 67.47. USDINR fwd premia was trading at around 4.35% p.a.  FX reserves stands at USD 641.13 bn.

PAIRS RBI REF RATE (22/09)
USDINR 73.80
EURINR 86.52
GBPINR 100.76
JPYINR 67.36

In Sept, FII’S have net bought Rs 5300 cr in Equity segment and have net bought Rs 2255 cr of debt. In this financial year, FII’S have net bought Rs 2925 Cr worth of Indian Equities and have bought Rs 10120 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 closed flat y’day. DOW climbed 338 points (1%). Nikkei was down 0.67% y’day and Hang seng climbed 0.51% on Tuesday.

Euro is now at 1.1695, Pound at 1.3626, Yen at 109.90.

Commodities: Gold is now at USD 1763 and WT1Crude at USD 72.33/Brent at USD 73.65.

Interest rates: USD 10 Yr yield is at 1.302% and 3 m libor closed at 0.12%. Indian 10 yr benchmark yield closed at 6.12%.

Economic news: USD rose against majors as Fed shifted its stance on QE tapering. Fed maintained status quo, but it was categorical that asset purchase tapering is warranted sooner than later. Tapering could start by Nov and end by mid-2022. 7 out of 9 members felt that rate hike is warranted in 2022. Fed Chair Jerome Powell reiterated that he believed the U.S. economy had already surpassed the central bank’s goals for inflation, and said a “reasonably good” September jobs report would indicate that the Fed’s employment goals to begin tapering had been satisfied as well. 

Ifo lowered Germany growth forecast for 2021 sharply from 3.3% to 2.5%. But 2022 growth forecast was upgraded by 0.8% to 5.1%.

BoJ left monetary policy unchanged. Under the yield curve control framework, short term policy interest rate is held at -0.10%. 10-year JGB yield target is kept at around 0%, without upper limit on bond purchases. Overall assessment on the economy was maintained as it has “picked up as a trend” but “remained in a severe situation” due to the pandemic home and abroad. But it noted that some exports and production have been “affected by supply-side constraints”.

Data highlights: – US Existing home sales climbed marginally to 5.88 mn.

Thursday’s calendar: – US Weekly jobless claims

-EU PMI(flash-mfrg) and PMI(flash-services)

-UK PMI(mfrg) and PMI(services)

USD/INR      73.93 73.66
EUR/USD     1.1695 1.1757 1.1683
GBP/USD     1.3626 1.3691 1.3609
USD/JPY     109.90 109.90 109.12

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1709 1.1735 1.1782 1.1808 1.1661 1.1636 1.1588
GBP/USD 1.3642 1.3675 1.3723 1.3756 1.3593 1.3561 1.3512
USD/JPY 109.60 110.08 110.38 110.86 109.30 108.82 108.51
USD/INR 73.81 73.97 74.09   73.69 73.53

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.1665 1.18/1.1910 DN UP>1.1910
GBP/USD 1.3725/1.36 1.39 SIDE DN<1.3725
USD/JPY 109.10/108.75 110.80/111.60 UP DN<108.70
USD/INR 73.33 74.10 UP DN<73.35
USD/CHF 0.9240 0.9375/0.9475 UP DN<0.9240

Technicals: Spot closed below 50 and 100 day major moving averages, but above 20 and 200 day moving averages. 20 day moving average is at 73.51. 50 day moving average is at 74.04.200 day moving average is at 73.58. Daily MACD is in buy zone, implying bottom at 72.92. Important resistance is at 74.10 and important support is at 73.33. Spot closed above its average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 73.87, S1:73.76, S2:73.59, R1:74.04, R2:74.15              

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 at around 73.50/73.30.

Exporters can hedge EURINR receivables exposure at 87.25.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 50, 100 and 200 day moving averages. Major resistance is at 1.18/1.1910. Next major support is at 1.1665. Daily MACD is in sell zone, implying an important top at 1.19. 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 1.39 and weekly MACD is in sell zone, implying important top at 1.4240. Important support is at 1.3725 and later at 1.36.Important resistance is at 1.39.

USD/YEN: The pair is between major moving averages. Daily MACD is in sell zone, implying important top at 110.46. Next important resistance is at 110.50/110.80. Important support is at 109.10/108.70

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