FX MORNING UPDATE 

USDINR opened at 74.50 y’day and the pair traded in the 74.47-74.61 range. Spot USDINR closed at 74.56, gain of 30 ps for USD as against prior close of 74.26. RBI reference rate was fixed at 74.51 on 04/01Jan USD/INR closed at 74.78, gain of 25 ps for USD as compared to prior day’s close of 74.53..Jan Euro/INR closed at 84.45, GBP/INR at 100.85 and Yen/INR at 64.49. USDINR fwd premia was trading at around 4.60% p.a.  FX reserves stands at USD 635.10 bn.

PAIRS RBI REF RATE (04/01)
USDINR 74.51
EURINR 84.24
GBPINR 100.39
JPYINR 64.41

In Dec, FII’S have net sold Rs 9515 cr in Equity segment and have net sold Rs 10937 cr of debt. In this financial year, FII’S have net sold Rs 2838 Cr worth of Indian Equities and have bought Rs 2893 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 180 points (1.02%). DOW climbed 214 points (0.59%). Nikkei climbed 1.77% and Hang seng climbed 0.06% .

Euro closed at 1.1284, Pound at 1.3533, Yen at 116.15.

Commodities: Gold is now at USD 1814 and WT1Crude at USD 77.20/Brent at USD 80.20.

Interest rates: USD 10 Yr yield is at 1.65% and 3 m libor closed at 0.22%. Indian 10 yr benchmark yield closed at 6.45%.

Economic news: US ISM Manufacturing dropped from 61.1 to 58.7 in December, below expectation of 60.2. Looking at some details, new orders dropped -1.1 to 60.4. Production dropped -2.3 to 59.2. Employment rose 0.9 to 54.2. Prices dropped sharply by -14.2 to 68.2.

ISM said: “The past relationship between the Manufacturing PMI® and the overall economy indicates that the Manufacturing PMI® for December (58.7 percent) corresponds to a 4.4-percent increase in real gross domestic product (GDP) on an annualized basis.”

Data highlights: – US ISM( mfrg) dipped to 58.7.

-German retail sales climbed 0.6% m/m.

-UK PMI(mfrg) was reported at 57.9.

Wednesday’s calendar: –

USD/INR      74.61 74.47
EUR/USD     1.1284 1.1381 1.1279
GBP/USD     1.3533 ` 1.3557 1.3460
USD/JPY      116.15 116.36 115.29

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1293 1.1313 1.1343 1.1363 1.1263 1.1243 1.1213
GBP/USD 1.3516 1.3572 1.3614 1.3670 1.3475 1.3418 1.3377
USD/JPY 115.94 116.59 117 117.65 115.52 114.88 114.46
USD/INR 74.54 74.62 74.69   74.47 74.39  

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 1.3615 DN UP>1.3850
USD/JPY 112.50 115.40 SIDE DN<112.50
USD/INR 74.10/73.80 74.60/74.85 UP DN<74.10
USD/CHF 0.9150 0.9375 SIDE DN<0.9150

Technicals: Spot closed above 200 day major moving averages.20 day moving average is at 74.94. 50 day moving average is at 74.95.200 day moving average is at 74.10. Daily MACD is in sell zone, implying top at 76.32. Important resistance is at 74.60/74.85 and important support is at 74.10 and later at 73.85. Spot closed below its average level of the day.

Intraday supports and resistances for Jan contract are:

PP: 74.72, S1:74.61, S2:74.44, R1:74.89, R2:75.             

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

However on directional basis, suggest the following:

USDINR imports can be hedged.

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 1.3610.

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 115.40. Important support is at 112.50.

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