USDINR opened at 79.86 on Friday and the pair traded in the 79.81-79.94 range. Spot USDINR closed at 79.87, unchanged for USD as against prior close of 79.87. 

RBI reference rate was fixed at 79.91 on 26/08. Sep USD/INR closed at 80.08, loss of 6 ps for USD as compared to prior day’s close of 80.14. Aug Euro/INR closed at 80.35, GBP/INR at 94.83 and Yen/INR at 58.71. USDINR fwd premia was trading at around 3.03% p.a.  FX reserves stands at USD 564 bn as on Aug 26 th. FX reserves declined by USD 6 bn as compared to Aug 12 th data.

In Aug till date FII’S have net bought Rs 47437 Cr of Equities in Cash segment and have sold Rs 4895 Cr of debt till date. In this Calendar Year, FII’S have sold close to Rs 1.49 lac Cr worth of Equities. 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 climbed 36 points (0.21%) on Friday. DOW declined 1008 points (3.03%). Nikkei climbed 0.57% and Hang Seng climbed 1.01%.

Euro closed at 0.9961, Pound at 1.1747, Yen at 137.52.

Commodities: Gold is now at USD 1750 and WT1Crude at USD 93/Brent at USD 100.

Interest rates: USD 10 Yr yield is at 3.03% and 3 m libor closed at 2.92%. Indian 10 yr benchmark yield closed at 7.22%.

Economic news: Fed Chairman’s sharp and focused speech at Jackson Hole symposium brought back risk aversion and prompted new wave of USD bullishness. Stocks sold off heavily, fearing that Fed has no interest pivot and will use interest rate as a tool to achieve their inflation goal.

Fed Chairman said that “Reducing inflation is likely to require a sustained period of below-trend growth. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation,” he said, adding, “but a failure to restore price stability would mean far greater pain.” Additionally, Powell emphasized, “the historical record cautions strongly against prematurely loosening policy. We must keep at it until the job is done. History shows that the employment costs of bringing down inflation are likely to increase with delay.”

PCE price index rose 6.3% yoy, slowed from 6.8% yoy. PCE core, excluding food and energy, rose 4.6% yoy, slowed from 4.8% yoy.

US Treasury bond was relatively quiet with 10 Year trading at 3.03%. USD index maintains its bullishness.

Euro’s downtrend below parity is sustaining as EU economy is clouded by energy crunch, trade exposure to China, and high inflation.

Data highlights: – US Personal income climbed 0.2% m/m, spending climbed 0.1% m/m and core PCE index climbed 0.1% m/m.

Monday’s calendar : – No major data release.

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed above 200 day major moving averages.20 day moving average is at 79.55. 50 day moving average is at 79.28.200 day moving average is at 76.61. Daily MACD is in buy zone. Important supports are at 79.70/79.55 and important resistance is at 80.06. Spot closed at its average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 80.09, S1:80, S2:79.94, R1:80.16, R2:80.24.             

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

However on directional basis, suggest the following:

USDINR imports be hedged.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below major moving averages. Major resistance is at 1.0370. Next major support is at 0.9935. Daily MACD is in sell zone, implying an important top at 1.0370. 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 1.2275 and weekly MACD is in sell zone, implying important top at 1.3730. Important support is at 1.1645. Important resistance is at 1.19/1.2040/1.2275.

USD/YEN: The pair is above 50 and 200 day moving averages. Daily MACD is in buy zone, implying important bottom at 130.40. Important support is at 130.40. Major resistance is at 139.40.