FX MORNING UPDATE      

USDINR opened at 73.79 y’day and the pair traded in the 73.78-74.05 range. Spot USDINR closed at 73.92, gain of 1 ps for USD as against prior close of 73.91. RBI reference rate was fixed at 73.99 on 12/01Jan USD/INR closed at 74.04, loss of 5 ps for USD as compared to prior day’s close of 74.09. Jan Euro/INR closed at 84.20, GBP/INR at 100.96 and Yen/INR at 64.22. USDINR fwd premia was trading at around 4.75% p.a.  FX reserves stands at USD 633 bn.

PAIRS RBI REF RATE (12/01)
USDINR 73.99
EURINR 84.16
GBPINR 100.95
JPYINR 64.16

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 156 points (0.87%). DOW climbed 38 points (0.11%). Nikkei declined 0.90% and Hang seng declined 0.04% .

Euro closed at 1.1439, Pound at 1.3712, Yen at 114.56.

Commodities: Gold is now at USD 1825 and WT1Crude at USD 82.48/Brent at USD 84.50.

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: Indian CPI rose to 5.59% as Food inflation doubled to 4% and waning of low base effect. IIP decreased in November to 1.4% as supply shortages continued to haunt factory production. Industrial output grew 3.2% in October, and had contracted 1.9% in November 2020. Mfrg grew by 0.9% in NovDuring April-November this fiscal, the IIP grew 17.4% against a 15.3% contraction in the same period last year.

Rupee gained to 73.78 in opening trade y’day. However, RBI intervention weakened Rupee to 74. U.S. consumer price index rose 7% in the 12 months through December, the biggest annual increase in nearly 40 years.

Data highlights: – US CPI climbed 0.5% m/m.

-EU Industrial production climbed 2.3% m/m.

Thursday’s calendar: – US PPI and weekly jobless claims.

USD/INR      74.05 73,78
EUR/USD     1.1439 1.1453 1.1355
GBP/USD     1.3712 1.3714 1.3621
USD/JPY      114.56 115.47 114.39

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1416 1.1477 1.1514 1.1575 1.1379 1.1318 1.1281
GBP/USD 1.3681 1.3741 1.3771 1.3834 1.3648 1.3588 1.3555
USD/JPY 114.84 115.29 115.92 116.38 114.21 113.76 113.12
USD/INR 73.91 74.05 74.19   73.77 73.63  

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.12 1.1510 DN UP>1.17
GBP/USD 1.34 1.3850 SIDE UP>1.3850
USD/JPY 114.30 116.35 UP DN<112.50
USD/INR 73.70 74.30/74.60 DN UP>74.35
USD/CHF 0.9085 0.9375 SIDE DN<0.9085

Technicals: Spot closed below 200 day major moving averages.20 day moving average is at 74.82. 50 day moving average is at 74.85.200 day moving average is at 74.10. Daily MACD is in sell zone, implying top at 76.32. Important resistance is at 74.30/74.60 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: 74.03, S1:73.88, S2:73.73, R1:74.18, R2:74.33.             

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 1.1535. 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 1.3850.

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

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