FX – MORNING UPDATE :

USDINR opened at 83.11 y’day and the pair traded in the 83.10-83.15 range. Spot USDINR closed at 83.11, loss of 4 ps for USD as against prior close of 83.15.

RBI reference rate was fixed at 83.12 on 30/01. Feb USD/INR closed at 83.20 y’day, loss of 5 ps for USD as compared to prior day’s close of 83.25. Feb Euro/INR closed at 90.33, GBP/INR at 105.56 and Yen/INR at 56.81. 1 year USDINR fwd premia was trading at around 1.86% p.a.  FX reserves stood at USD 616 bn, as on Jan 19 th. Reserves declined by USD 2.93 bn w/w.

In Jan, FPI’S have sold Rs 36036 Cr of Equities and bought Rs 16951 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 215 points (0.99%) y’day. US S&P closed flat (0%) y’day. Nikkei climbed 0.05% and Hang Seng declined 2.32% y’day.

Euro is now at 1.0840, Pound at 1.2690, Yen at 147.44.

Commodities: Gold is now at USD 2036 and WT1Crude at USD 77.50/Brent at USD 82.20.

Interest rates: USD 10 Yr yield is at 4.02% and 3 m libor closed at 5.59%. Indian 10 yr benchmark yield closed at 7.15%.

Economic news: Eurozone GDP was stable in Q4, better than expectation of -0.1% qoq contraction. Compared with the same quarter of the previous year, GDP increased by 0.1% yoy.

Fed, BOE rate meetings and US employment data along with ISM (mfrg) will be the focus events for the week.

Data highlights: – US House price index climbed 0.3% m/m.

Wednesday’s calendar : –  US ADP employment report

-German retail sales

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 83.15. 50 day moving average is at 83.22.200 day moving average is at 82.75. Daily MACD is in buy zone. Important support is at 82.80 and important resistance is at 83.17/83.24. Spot closed below the average level of the day.

Intraday supports and resistances for Feb contract are:

PP: 83.25, S1:83.15, S2:83.11, R1:83.30, R2:83.39.             

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 between major moving averages. Major resistance is at 1.0935/1.10. Next major support is at 1.0770. 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 1.28/1.30.

USD/YEN: The pair is above all major moving averages. Daily MACD is in buy zone, implying important bottom at 140. Important resistance is at 148.90/150 and support is at 146/144.35.