FX – MORNING UPDATE :

USDINR opened at 83.14 Y’day and the pair traded in the 82.96-83.19 range. Spot USDINR closed at 83.03, loss of 10 ps for USD as against prior close of 83.13.

RBI reference rate was fixed at 83.15 on 10/01. Jan USD/INR closed at 83.10 y’day, loss of 9 ps for USD as compared to prior day’s close of 83.19. Jan Euro/INR closed at 91, GBP/INR at 105.70 and Yen/INR at 57.53. 1 year USDINR fwd premia was trading at around 1.82% p.a.  FX reserves stood at USD 623 bn as on Dec 29 th.  FX reserves climbed USD 2.75 bn, last week.

In Jan, FPI’S have bought Rs 2665 Cr of Equities and bought Rs 2632 Cr of debt . In last calendar year, FII’S have net bought Rs 172853 Cr of Equities and have net bought Rs 70489 Cr of debt.

Benchmark Nifty climbed 73 points (0.34%) y’day. US S&P climbed 27 points y’day (0.57%) y’day. Nikkei climbed 1.91% and Hang Seng climbed 0.99% y’day.

Euro is now at 1.0978, Pound at 1.2759, Yen at 145.47.

Commodities: Gold is now at USD 2029 and WT1Crude at USD 71.65/Brent at USD 77.

Interest rates: USD 10 Yr yield is at 3.99% and 3 m libor closed at 5.59%. Indian 10 yr benchmark yield closed at 7.18%.

Economic news: US CPI, Indian CPI and IIP data are important data events for coming week. ECB Vice President pointed out that “soft indicators” suggest an economic “contraction” in EU in December, hinting at the likelihood of a “technical recession” . This downturn is expected to have broad impacts across various sectors, with “construction and manufacturing” being particularly hit. “Services” sector is also anticipated to “soften in the coming months as a result of weaker activity in the rest of the economy.” Regarding the ECB’s monetary policy, he expressed that the “current level of interest rates,” if maintained, would substantially aid in returning inflation to the ECB’s target. H

Data highlights: – No major data release.

Thursday’s calendar : – US Weekly jobless claims and 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 83.19. 50 day moving average is at 83.26.200 day moving average is at 82.71. Daily MACD is in sell zone. Important support is at 82.90/82.80 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: 83.12, S1:82.99, S2:82.89, R1:83.22, R2:83.35.             

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 82.92/82.80 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 1.0875/1.0740. Daily MACD is in sell zone, implying an important top at 1.1275. 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 sell zone, implying important top at 1.2810 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 1.2810/1.30.

USD/YEN: The pair is below 200 day moving average. Daily MACD is in buy zone, implying important bottom at 140. Important resistance is at 146.50/147.50 and support is at 140.