FX MORNING UPDATE  

USDINR opened at 75.40 on Friday and the pair traded in the 75.27-75.42 range. Spot USDINR closed at 75.37, gain of 42 ps for USD as against prior close of 74.95. RBI reference rate was fixed at 75.35 on 11/02Feb USD/INR closed at 75.39, gain of 34 ps for USD as compared to prior day’s close of 75.05. Feb Euro/INR closed at 85.91, GBP/INR at 102.18 and Yen/INR at 65.02. USDINR fwd premia was trading at around 3.89% p.a.  

PAIRS RBI REF RATE (11/02)
USDINR 75.35
EURINR 85.74
GBPINR 101.89
JPYINR 64.91

In Feb, FII’S have net sold Rs 9712 cr in Equity segment and have net bought Rs 5837 cr of debt. In this financial year, FII’S have net sold Rs 42334 Cr worth of Indian Equities and have bought Rs 12345 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 declined 231 points (1.31%). DOW declined 503 points (-1.43%). Nikkei climbed 0.42% and Hang Seng declined 0.07% on Friday.

Euro is now at 1.1351, Pound at 1.3566, Yen at 115.40.

Commodities: Gold is now at USD 1860 and WT1Crude at USD 93.95/Brent at USD 95.05.

Interest rates: USD 10 Yr yield is at 1.92% and 3 m libor closed at 0.29%. Indian 10 yr benchmark yield closed at 6.69%.

Economic news: Rupee declined and Equities tumbled on fears of Global monetary tightening. USDINR fwd premia declined further to 3.89% p.a. due to shrinking rate differentials.

US is bracing for steep rate hikes this year and liquidity withdrawal. Russia increased rates. BOE members wanted bigger rate hike in last meeting. With GDP coming back to pre pandemic levels and overall containment of infections, central banks will normalize rates back to pre pandemic levels in next 1 to 2 years.

UK GDP contracted -0.2% mom in December, better than expectation of -0.5% mom. Q4 GDP grew 1.0% qoq.

US retail sales and FOMC are key events in coming week.

Data highlights: – UK industrial and manufacturing production climbed 0.3% and 0.2% m/m respectively.

Monday’s calendar: –

USD/INR      75.42 75.27
EUR/USD      1.1351 1.1431 1.1330
GBP/USD      1.3566 1.3609 1.3515
USD/JPY      115.40 116.18 115.04

Daily Support/Resistance table

Currency Pairs Pivot R1 R2 R3 S1 S2 S3
EURO/USD 1.1370 1.1411  1.1471    1.1309 1.1269  
GBP/USD 1.3563 1.3611 1.3659   1.3517 1.3467  
USD/JPY 115.54 116.04 116.68    114.90 114.40  
USD/INR 75.35 75.43 75.50   75.28 75.20  

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency Pair Supports Resistances Trend Remarks
EURO/USD 1.1275/1.12 1.1480 DN UP>1.15
GBP/USD 1.3435/1.3355/1.3170 1.3630/1.3750 DN UP>1.3630
USD/JPY 113.50 116.30 UP DN<113.50
USD/INR 75.10 75.65 UP DN<75.05
USD/CHF 0.9085 0.9275/0.9375 SIDE DN<0.9085

Technicals: Spot closed above 200 day major moving averages.20 day moving average is at 74.61. 50 day moving average is at 74.91.200 day moving average is at 74.30. Daily MACD is in buy zone, implying bottom at 73.80. Important resistance is at 75.65 and important support is at 75.05. Spot closed above its average level of the day.

Intraday supports and resistances for Feb contract are:

PP: 75.42, S1:75.25, S2:75.11, R1:75.56, R2:75.73.             

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

However on directional basis, suggest the following:

USDINR exports can be hedged at 75.60 +.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 200 day major moving average, but above 20 and 50 day moving average,. Major resistance is at 1.1485. Next major support is at 1. 1.1270/1.12.. Daily MACD is in buy zone, implying an important bottom at 1.1120. Weekly MACD is in buy zone, implying important bottom at 1.1120.

GBP/USD: The pair is above 50 ,but below 200 day moving averages. Daily MACD is in buy zone, implying important bottom at 1.3360 and weekly MACD is in buy zone, implying important bottom at 1.3170. Important support is at 1.3170. Important resistance is at 1.3630/1.3750.

USD/YEN: The pair is above all major moving averages. Daily MACD is in buy zone, implying important bottom at 113.50. Next important resistance is at 116.35. Important support is at 113.50

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