FX MORNING UPDATE

USDINR opened at 75.46 y’day and the pair traded in the 75.22-75.46 range. Spot USDINR closed at 75.24, loss of 31 ps for USD as against prior close of 75.55. RBI reference rate was fixed at 75.35 on 23/12Dec USD/INR closed at 75.28, loss of 33 ps for USD as compared to prior day’s close of 75.61. Dec Euro/INR closed at 85.24, GBP/INR at 101.01 and Yen/INR at 65.90. USDINR fwd premia was trading at around 4.58% p.a.  FX reserves stands at USD 635.83 bn.

PAIRS RBI REF RATE (23/12)
USDINR 75.35
EURINR 85.42
GBPINR 100.59
JPYINR 65.98

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 climbed 117 points (0.69%). DOW climbed 196 points (0.55%). Nikkei climbed 0.83% and Hang seng climbed 0.40% y’day.

Euro is now at 1.1324, Pound at 1.3409, Yen at 114.40.

Commodities: Gold is now at USD 1804 and WT1Crude at USD 73.70/Brent at USD 75.50.

Interest rates: USD 10 Yr yield is at 1.46% and 3 m libor closed at 0.17%. Indian 10 yr benchmark yield closed at 6.46%.

Economic news: PCE index, the Federal Reserve’s preferred inflation gauge, jumped to 5.7% in November from 5% in the prior month. That’s the highest rate since 1982.The core PCE rate that strips out food and energy surged to 4.7% from 4.1% on an annual basis. That’s the highest rate since 1989.

There are continued reports that the Omicron variant poses a great risk of contagion but perhaps a lesser risk of serious disease and hospitalization, which also has led governments being less willing to take extreme containment measures that might impinge on consumer behavior or the economy more generally. This supported Equity and Commodity markets.

Euro is range bound. Sterling maintained its corrective upward momentum.

Data highlights: – US Personal income was up 0.4% m/m spending was up 0.6% m/m and Core PCE index climbed 0.5% m/m.

-US Weekly jobless claims was reported at 205k, durables order climbed 2.5% m/m and new home sales dipped to 744k.

Friday’s calendar: – US bank holiday, no major data rlease.

USD/INR      75.46 75.33
EUR/USD     1.1324 1.1342 1.1291
GBP/USD     1.3409 ` 1.3439 1.3342
USD/JPY      114.14 114.47 114.11

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1319 1.1347 1.1370 1.1399 1.1296 1.1268 1.1245
GBP/USD 1.3395 1.3448 1.3491 1.3544 1.3351 1.3299 1.3255
USD/JPY 114.35 114.59 114.72 114.96 114.23 113.98 113.86
USD/INR 75.30 75.39 75.55   75.14 75.05  

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.12 1.1385/1.1510 DN UP>1.17
GBP/USD 1.3170 1.3470 DN UP>1.3850
USD/JPY 112.50 114.70/115.40 SIDE DN<112.50
USD/INR 75.10/74.80 75.40/75.70 SIDE UP>75.70
USD/CHF 0.9150 0.9375 SIDE DN<0.9150

Technicals: Spot closed above 50 and 100, 200 day major moving averages.20 day moving average is at 75.41. 50 day moving average is at 75.06.200 day moving average is at 73.86. Daily MACD is in buy zone, implying bottom at 73.83. Important resistance is at 75.40/75.70 and important support is at 75.10 and later at 74.80. Spot closed at its average level of the day.

Intraday supports and resistances for Dec contract are:

PP: 75.62, S1:75.52, S2:75.44, R1:75.71, R2:75.80             

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

However on directional basis, suggest the following:

USDINR imports can be done at 75.10/74.80.

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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