USDINR opened at 76.25 on Friday and the pair traded in the 76.06-76.25 range. Spot USDINR closed at 76.08, loss of 1 ps for USD as against prior close of 76.09. RBI reference rate was fixed at 76.17 on 17/12. Dec USD/INR closed at 76.10, loss of 10 ps for USD as compared to prior day’s close of 76.20. Dec Euro/INR closed at 86.10, GBP/INR at 101.11 and Yen/INR at 67.03. USDINR fwd premia was trading at around 4.55% p.a.  FX reserves stands at USD 635.83 bn.

In Dec, FII’S have net sold Rs 7745 cr in Equity segment and have net sold Rs 3898 cr of debt. In this financial year, FII’S have net sold Rs 1069 Cr worth of Indian Equities and have bought Rs 16427 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 263 points (1.53%). DOW declined 532 points (-1.48%). Nikkei declined 1.79% and Hang seng declined 1.21% on Friday.

Euro closed the week at 1.1240, Pound at 1.3242, Yen at 113.67.

Commodities: Gold is now at USD 1798 and WT1Crude at USD 70.30/Brent at USD 73.

Interest rates: USD 10 Yr yield is at 1.41% and 3 m libor closed at 0.17%. Indian 10 yr benchmark yield closed at 6.41%.

Economic news: BoJ kept short-term policy interest rate unchanged at -0.10%, and 10-year JGB target at around 0% without upper limit to purchases. It will continue to buy ETFs and J-REITs with upper limits of JPY 12T and JPY 180B respectively on annual paces.

Markets were in risk off mode. Rupee retraced 30 ps from its peak of 76.30. Euro declined towards NY close and is trading near its recent lows.

German Ifo data was disappointing. UK’S BOE member said that more rate hikes is possible, if inflation persists.

Data highlights: – German Ifo survey dipped to 94.7.

-UK retail sales climbed 1.4% m/m.

Monday’s calendar: – No major data release.

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed above 50 and 100, 200 day major moving averages.20 day moving average is at 75.28. 50 day moving average is at 74.96.200 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 75.70 and later at 75.10. Spot closed below its average level of the day.

Intraday supports and resistances for Dec contract are:

PP: 76.17, S1:75.99, S2:75.88, R1:76.28, R2:76.46             

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.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 50, 100 and 200 day moving averages. Major resistance is at 1.1385/1.1535. 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 buy zone, implying important bottom at 1.3170 and weekly MACD is in sell zone, implying important top at 1.4240. Important support is at 1.3170. Important resistance is at 1.3470/1.3610.

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

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