USDINR opened at 73.94 y’day and the pair traded in the 73.83-74 range. Spot USDINR closed at 73.91, loss of 13 ps for USD as against prior close of 74.04. RBI reference rate was fixed at 73.93 on 11/01. Jan USD/INR closed at 74.09, loss of 14 ps for USD as compared to prior day’s close of 74.23. Jan Euro/INR closed at 84.01, GBP/INR at 100.72 and Yen/INR at 64.23. USDINR fwd premia was trading at around 4.70% p.a.  FX reserves stands at USD 633 bn.

In Jan, FII’S have net bought Rs 1948 cr in Equity segment and have net bought Rs 66 cr of debt. In this financial year, FII’S have net sold Rs 890 Cr worth of Indian Equities and have bought Rs 2959 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 52 points (0.29%). DOW climbed 183 points (0.51%). Nikkei declined 0.90% and Hang seng declined 0.03% .

Euro closed at 1.1367, Pound at 1.3630, Yen at 115.24.

Commodities: Gold is now at USD 1819 and WT1Crude at USD 81.40/Brent at USD 83.75.

Interest rates: USD 10 Yr yield is at 1.74% and 3 m libor closed at 0.22%. Indian 10 yr benchmark yield closed at 6.58%.

Economic news: Rupee gained further, shrugging off Omicron spread and its negative economic implications. Fed Chairman confirmed the Fed plans to begin normalizing policy including ending bond purchases, hiking rates, and letting bonds on its balance sheet mature later this year.“I would expect that this year 2022 will be the year in which we take steps toward normalization [of monetary policy],” Powell said.That would involve “ending asset purchases in March, raising rates over the course of the year  … and “perhaps later this year, we will start to allow the balance sheet to run off.”

His statement sounded less hawkish as he did not mention selling off bonds to suck further liquidity.

US CPI, retail sales data are key events for the week.

Indian IIP and CPI releases are other key events for the week.

Data highlights: – No major data

Wednesday’s calendar: – US CPI

-EU Industrial production

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed below 200 day major moving averages.20 day moving average is at 74.93. 50 day moving average is at 74.87.200 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 73.85/73.70. Spot closed below its average level of the day.

Intraday supports and resistances for Jan contract are:

PP: 74.09, S1:73.98, S2:73.87, R1:74.20, R2:74.31.             

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 above 50 , but below 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 1.34. Important resistance is at 1.37.

USD/YEN: The pair is above 50 and 200 day major moving averages. Daily MACD is in buy zone, implying important bottom at 112.50. Next important resistance is at 116.35. Important support is at 114.30.