FX MORNING UPDATE            

USDINR opened at 78.14 y’day and the pair traded in the 78.03-78.28 range. Spot USDINR closed at 78.04, gain of 20 ps for USD as against prior close of 77.84. RBI reference rate was fixed at 78.14 on 13/06. June USD/INR closed at 78.12, gain of 15 ps for USD as compared to prior day’s close of 77.97. June Euro/INR closed at 81.84, GBP/INR at 95.15 and Yen/INR at 58.22. USDINR fwd premia was trading at around 3.45% p.a.  FX reserves stands at USD 601.1 bn.

PAIRSRBI REF RATE (13/06)
USDINR78.14
EURINR81.94
GBPINR95.81
JPYINR58.04

In 2022-23 fiscal, FII’S have sold 59281 Cr of Equities till date and have sold Rs 7298 Cr of debt till date. In 2021-22, FII’S net sold Rs 128897 cr in Equity segment and have net bought Rs 4805 cr of 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 427 points (2.64%) y’day. DOW declined 876 points. (2.79%).Nikkei declined 3% and Hang Seng declined 3.39%.

Euro is now at 1.0517, Pound at 1.2313, Yen at 134.40.

CommoditiesGold is now at USD 1825 and WT1Crude at USD 121/Brent at USD 122.

Interest rates: USD 10 Yr yield is at 3.36% and 3 m libor closed at 1.74%. Indian 10 yr benchmark yield closed at 7.59%.

Economic news: Rupee opened gap down and further weakness was stemmed by RBI intervention. USDINR fwd premia declined significantly with 1 year trading at 3.45% p.a.. This is due to rise in US 10 Year yield to 3.165%.

Indian inflation eased to 7.04% in May from 7.79% in April, still above RBI’S target of 6%. Food inflation rose 7.97%. IIP climbed 7.1% in April. Mfrg sector climbed 6.3%.

UK GDP contracted -0.3% mom in April, worse than expectation of 0.2% mom growth. Services fell -0.3% mom. Production fell -0.6% mom. Construction also fell by -0.4% mom. This is the first time that all main sectors have contributed negatively to a monthly GDP estimate since January 2021.

Wall Street officially entered bear market territory and bond yields hit a two-decade high on fears aggressive U.S. interest rate hikes would push the world’s largest economy into recession. Though Fed has guided 50 bps rate hike, there is speculation that it may raise rates by 75 bps to combat four decade high inflation.

Focus will be on US FOMC meeting and UK MPC decision on rates and forward guidance.

Data highlights: – UK industrial and manufacturing production declined -0.6% and -1% m/m respectively.

Tuesday’s calendar :  US PPI

-EU Zew survey

-UK unemployment rate

USD/INR   78.2878.03
EUR/USD      1.04101.04961.0400
GBP/USD      1.21431.23001.2107
USD/JPY      134.27135.16133.60

Daily Support/Resistance table

Currency PairsPivotR1R2R3S1S2S3
EURO/USD1.04371.04741.05331.05711.03781.03411.0282
GBP/USD1.21841.22611.23771.24541.20681.19911.1875
USD/JPY134.33135.06135.90136.63133.50132.76131.93
USD/INR78.1178.2078.36 77.9477.86 

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency PairSupportsResistancesTrendRemarks
EURO/USD1.03401.0790DNUP<1.0790
GBP/USD1.21651.2660/1.28DNSIDE>1.2660
USD/JPY131.35136.25UPSIDE<131.35
USD/INR77.8078.25UPSIDE<77.48
USD/CHF0.95501.0066UPDN<0.9550

Technicals: Spot closed above 200 day major moving averages.20 day moving average is at 77.64. 50 day moving average is at 76.89.200 day moving average is at 75.30. Daily MACD is in sell zone. Important supports are at 77.80 and important resistance is at 78.25. Spot closed above its average level of the day.

Intraday supports and resistances for June contract are:

PP: 78.20, S1:78.01, S2:77.92, R1:78.30, R2:78.48.             

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

However on directional basis, suggest the following:

USDINR Exports can be partially hedged at 78.25+ levels. Nearby imports can be hedged at 77.80.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below major moving averages. Major resistance is at 1.0790. Next major support is at 1.0350. Daily MACD is in sell zone, implying an important top at 1.0790. Weekly MACD is in sell zone, implying important top at 1.1498.

GBP/USD: The pair is below 50 and 200 day moving averages. Daily MACD is in sell zone, implying important top at 1.2660 and weekly MACD is in sell zone, implying important top at 1.3730. Important support is at 1.2165. Important resistance is at 1.2660/1.28.

USD/YEN: The pair is above major moving averages. Daily MACD is in buy zone, implying important bottom at 126.30. Important support is at 126.30/125. Major resistance is at 131.30.

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