FX – MORNING UPDATE :

USDINR opened at 82.94 Y’day and the pair traded in the 82.92-83.14 range. Spot USDINR closed at 83.13, gain of 11 ps for USD as against prior close of 82.92.

RBI reference rate was fixed at 82.98 on 16/01. Jan USD/INR closed at 83.16 y’day, gain of 25 ps for USD as compared to prior day’s close of 82.91. Jan Euro/INR closed at 90.56, GBP/INR at 105.06 and Yen/INR at 56.88. 1 year USDINR fwd premia was trading at around 1.84% p.a.  FX reserves stood at USD 617 bn, as on Jan 5 th. Reserves declined by USD 5 bn w/w.

In Jan, FPI’S have bought Rs 1765 Cr of Equities and bought Rs 6546 Cr of debt . In last calendar year, FII’S have net bought Rs 172853 Cr of Equities and have net bought Rs 70489 Cr of debt.

Benchmark Nifty declined 65 points (0.29%) Y’day. US S&P declined 17 points (0.37%) y’day. Nikkei declined 0.66% and Hang Seng declined 2.16% y’day.

Euro is now at 1.0874, Pound at 1.2633, Yen at 147.32.

Commodities: Gold is now at USD 2028 and WT1Crude at USD 72/Brent at USD 78.

Interest rates: USD 10 Yr yield is at 4.05% and 3 m libor closed at 5.59%. Indian 10 yr benchmark yield closed at 7.14%.

Economic news: Focus is on US retail sales.

Chinese GDP climbed less than expected at 5.2% in Q4. This is better than 4.9% growth in Q3. Overall GDP climbed 5.2% in 2023 as against 3% in 2022. Slowing consumer spending, a property market meltdown and limited government support were the key headwinds faced by the Chinese economy through 2023. 

Data highlights: – German and EU Zew surveys improved to 15.2 and 22.7 respectively.

-UK unemployment rate was reported at 4.2% and claimant count change was reported at 11.7k.

Wednesday’s calendar : – US retail sales and industrial production

-UK CPI, PPI(output) and RPI

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed below 20 and  50 day average but above 200 day moving averages.20 day moving average is at 83.16. 50 day moving average is at 83.24.200 day moving average is at 82.71. Daily MACD is in sell zone. Important support is at 82.80 and important resistance is at 83.15/83.24. Spot closed above the average level of the day.

Intraday supports and resistances for Jan contract are:

PP: 83.10, S1:83.02, S2:82.87, R1:83.24, R2:83.33.             

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

However on directional basis, suggest the following:

USD exports be hedged at 83.35/83.40. Imports be hedged at 82.92/82.80 for 3 months.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is above major moving averages. Major resistance is at 1.1275. Next major support is at 1.0875/1.0740. Daily MACD is in sell zone, implying an important top at 1.1275. Weekly MACD is in buy zone, implying important bottom at 1.0450.

GBP/USD: The pair is above all major moving averages. Daily MACD is in sell zone, implying important top at 1.2810 and weekly MACD is in buy zone, implying important bottom at 1.25. Important support is at 1.2610/1.25. Important resistance is at 1.2810/1.30.

USD/YEN: The pair is below 200 day moving average. Daily MACD is in buy zone, implying important bottom at 140. Important resistance is at 146.50/147.50 and support is at 140.