FX MORNING UPDATE :

USDINR opened at 76.29 y’day and the pair traded in the 76.06-76.32 range. Spot USDINR closed at 76.09, loss of 14 ps for USD as against prior close of 76.23. RBI reference rate was fixed at 76.04 on 14/12Dec USD/INR closed at 76.20, loss of 20 ps for USD as compared to prior day’s close of 76.40. Dec Euro/INR closed at 86.05, GBP/INR at 101.10 and Yen/INR at 66.74. USDINR fwd premia was trading at around 4.55% p.a.  

PAIRS RBI REF RATE (16/12)
USDINR 76.25
EURINR 86.07
GBPINR 101.02
JPYINR 66.77

In Dec, FII’S have net sold Rs 3078 cr in Equity segment and have net bought Rs 124 cr of debt. In this financial year, FII’S have net bought Rs 3598 Cr worth of Indian Equities and have bought Rs 20201 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 27 points (0.16%). DOW declined 30 points (-0.06%). Nikkei climbed 2.13% and Hang seng climbed 0.23% y’day.

Euro is now at 1.1287, Pound at 1.3249, Yen at 114.10.

Commodities: Gold is now at USD 1784 and WT1Crude at USD 71.50/Brent at USD 74.40.

Interest rates: USD 10 Yr yield is at 1.43% and 3 m libor closed at 0.17%. Indian 10 yr benchmark yield closed at 6.35%.

Economic news: ECB left rates unchanged and confirmed ending PEPP purchases by March 2022. ECB upgraded its inflaton forecasts for the entire projection horizon. Headline CPI is expected to reach +3.2% y/y in 2022, before accelerating further to +4.8% in 2023. These are revised higher from +1.7% and +1.5%, respectively in September’s projectors. GDP growth forecasts are upgraded slightly higher to +5.1% y/y this year (Sep: +5%) but downgraded to +4.2% in 2022.

BoE surprised the markets by raising interest rates and maintains a hawkish tone. The central bank said it will review developments, including the impact of Omicron, in the February Monetary Policy Report, with focus on medium term prospects for inflation. There are “two-sided risks around inflation outlook in the medium term”. But, “some modest tightening of monetary policy over the forecast period is likely to be necessary to meet the 2% inflation target sustainably”.

Data highlights: – US building permits climbed to 1.71 mn, housing starts climbed to 1.68 mn, jobless claims incjed higher to 206k and industrial production climbed 0.5% m/m.

-EU PMI(mfrg-flash) climbed to 58 and PMI(services-flash) dipped to 53.3.

-UK PMI(mfrg) was reported at 57.6 and PMI(services) declined to 53.2.

Friday’s calendar: – German Ifo survey

-UK retail sales

USD/INR      76.32 76.06
EUR/USD     1.1323 1.1360 1.1280
GBP/USD     1.3323 ` 1.3376 1.3241
USD/JPY      113.69 114.25 113.57

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1325 1.1369 1.1404 1.1448 1.1290 1.1246 1.1211
GBP/USD 1.3313 1.3385 1.3447 1.3519 1.3250 1.3179 1.3116
USD/JPY 113.83 114.09 114.51 114.78 113.41 113.15 112.73
USD/INR 76.15 76.25 76.42   75.98 75.88  

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.12 1.1415/1.1510 DN UP>1.17
GBP/USD 1.3280 1.3515/1.3610 DN UP>1.3850
USD/JPY 112.50 114.70/115.40 SIDE DN<112.50
USD/INR 75.65 76.35 UP SIDE<75.65
USD/CHF 0.9150 0.9370 SIDE DN<0.9150

Technicals: Spot closed above 50 and 100, 200 day major moving averages.20 day moving average is at 75.20. 50 day moving average is at 74.92.200 day moving average is at 73.86. Daily MACD is in buy zone, implying bottom at 73.83. Important resistance is at 76.36/76.90 and important support is at 75.90 and later at 75.68. Spot closed below its average level of the day.

Intraday supports and resistances for Dec contract are:

PP: 76.25, S1:76.09, S2:75.99, R1:76.35, R2:76.51             

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

However on directional basis, suggest the following:

USDINR exports hedging can be done.

Exporters can hedge EURINR receivables exposure closer to 85.75/86.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 50, 100 and 200 day moving averages. Major resistance is at 1.1535. Next major support is at 1.12. Daily MACD is in buy zone, implying an important bottom at 1.1185. 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 1.3830 and weekly MACD is in sell zone, implying important top at 1.4240. Important support is at 1.3278. Important resistance is at 1.3515/1.3610.

USD/YEN: The pair is above 200 day, but below 50 day major moving averages. Daily MACD is in sell zone, implying important top at 115. Next important resistance is at 115. Important support is at 112.50.

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