FX MORNING UPDATE :                                                                                     

USDINR opened at 74.96 y’day and the pair traded in the 74.77-74.96 range. Spot USDINR closed at 74.92, loss of 10 ps USD as against prior close of 75.02. RBI reference rate was fixed at 74.95 on 27/10Nov USD/INR closed at 75.29, gain of 6 ps for USD as compared to prior day’s close of 75.23. Oct Euro/INR closed at 87.41, GBP/INR at 103.29 and Yen/INR at 66.23. USDINR fwd premia was trading at around 4.60% p.a.  

PAIRS RBI REF RATE (28/10)
USDINR 74.95
EURINR 86.93
GBPINR 103.15
JPYINR 65.72

In Oct, FII’S have net bought Rs 962 cr in Equity segment and have net sold Rs 2051 cr of debt. In this financial year, FII’S have net bought Rs 6249 Cr worth of Indian Equities and have bought Rs 17337 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 declined 1.94% y’day. DOW declined 266 points (0.74%). Nikkei was down 0.96% and Hang seng declined 0.28% y’day.

Euro is now at 1.1680, Pound at 1.3792, Yen at 113.57.

Commodities: Gold is now at USD 1800 and WT1Crude at USD 82.77/Brent at USD 83.73.

Interest rates: USD 10 Yr yield is at 1.56% and 3 m libor closed at 0.12%. Indian 10 yr benchmark yield closed at 6.36%.

Economic news: Euro was higher after ECB meeting. ECB’S rejection of inflation and tapering of asset purchases is bearish for EUR/USD. However, US GDP’S disappointment overshadowed ECB’S dovish tone.

US GDP expanded at an annual rate of 2.0% in the third quarter of 2021, according to the first estimate released by the US Bureau of Economic Analysis. This marked a sharp deceleration from the 6.7% growth recorded in the second quarter and also missed consensus estimates for a reading of 2.7%.

ECB kept monetary policy unchanged as widely expected. The interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively. The forward guidance is maintained.

That is, “the Governing Council expects the key ECB interest rates to remain at their present or lower levels until it sees inflation reaching two per cent well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term. This may also imply a transitory period in which inflation is moderately above target.”

PEPP purchases will continue with a total envelop of EUR 1850B, until at least end of March 2022. The pace of net asset purchases will remain “moderately lower” than in Q2 and Q3. APP purchases will continue at a monthly pace of EUR 20B too.

Data highlights: – US Pending home sales declined -2.3% m/m and weekly jobless claims declined to 281k.

Friday’s calendar: – US Personal income, spending, Core PCE index

-German retail sales

USD/INR      74.96 74.77
EUR/USD     1.1680 1.1692 1.1582
GBP/USD     1.3792 ` 1.3815 1.3722
USD/JPY     113.57 113.86 113.25

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1652 1.1722 1.1762 1.1832 1.1612 1.1542 1.1502
GBP/USD 1.3779 1.3836 1.3872 1.3928 1.3743 1.3686 1.3650
USD/JPY 113.58 113.91 114.19 114.52 113.30 112.97 112.69
USD/INR 74.88 75 75.07   74.80 74.69

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.1525/1.1475 1.1670/1.1710 DN UP>1.1910
GBP/USD 1.3655/1.3410 1.3835 SIDE UP>1.39
USD/JPY 112.10 115 UP SIDE<112.10
USD/INR 74.70 75.05/75.16/75.67 UP DN<74.70
USD/CHF 0.9150 0.9370 UP DN<0.91

Technicals: Spot closed above 50 and 100,200 day major moving averages.20 day moving average is at 74.87. 50 day moving average is at 74.17.200 day moving average is at 73.66. Daily MACD is in sell zone, implying top at 75.68. Important resistance is at 75.16/75.68 and important support is at 74.70. Spot closed above its average level of the day.

Intraday supports and resistances for Nov contract are:

PP: 75.15, S1:75.01, S2:74.89, R1:75.29, R2:75.42             

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 . Exports can be hedged at 75.50+.

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 1.1670/1.1710. Next major support is at 1.1530/1.1480. Daily MACD is in buy zone, implying an important bottom at 1.1525. Weekly MACD is in sell zone, implying important top at 1.2270.

GBP/USD: The pair is above 50 and 200 day moving averages. Daily MACD is in buy zone, implying important bottom at 1.3410 and weekly MACD is in sell zone, implying important top at 1.4240. Important support is at 1.3650/1.3410. Important resistance is at 1.3840.

USD/YEN: The pair is above major moving averages. Daily MACD is in buy zone, implying important bottom at 109.10. Next important resistance is at 114.70. Important support is at 112.10.

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