FX – MORNING UPDATE 

USDINR opened at 79.79 y’day and the pair traded in the 79.78-80.01 range. Spot USDINR closed at 79.97, gain of 22 ps for USD as against prior close of 79.75.

RBI reference rate was fixed at 79.92 on 21/09Sep USD/INR closed at 80, gain of 22 ps for USD as compared to prior day’s close of 79.78. Sep Euro/INR closed at 79.42, GBP/INR at 90.71 and Yen/INR at 55.61 USDINR fwd premia was trading at around 2.80% p.a.  FX reserves stands at USD 553 bn as on Sep 9 th. FX reserves declined by USD 11 bn as compared to Aug 26 th data.

PAIRSRBI REF RATE (21/09)
USDINR79.92
EURINR79.41
GBPINR90.82
JPYINR55.61

In Sep till date FII’S have net bought Rs 7824 Cr of Equities in Cash segment and have bought Rs 1786 Cr of debt till date. In this Calendar Year, FII’S have sold close to Rs 1.44 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 declined 97 points (-0.55%). DOW declined 522 points (-1.74%). Nikkei declined 1.36% and Hang Seng declined 1.79%.

Euro is now at 0.9812, Pound at 1.1225, Yen at 144.39.

Commodities: Gold is now at USD 1666 and WT1Crude at USD 82.45/Brent at USD 89.30.

Interest rates: USD 10 Yr yield is at 3.55% and 3 m libor closed at 3.48%. Indian 10 yr benchmark yield closed at 7.27%.

Economic news: Fed hiked rates by 75 bps and Fed Chairman sounded hawkish. Federal Reserve Chair Jerome Powell vowed on Wednesday that he and his fellow policymakers would “keep at” their battle to beat down inflation. Fed foresees its policy rate rising at a faster pace and to a higher level than expected, the economy slowing to a crawl, and unemployment rising to a degree historically associated with recessions.

Powell was blunt about the “pain” to come, citing rising joblessness and singling out the housing market, a persistent source of rising consumer inflation, as being likely in need of a “correction.”

Federal funds rate projected for the end of this year signals another 1.25 percentage points in rate hikes to come in the Fed’s two remaining policy meetings in 2022, a level that implies another 75-basis-point increase in the offing.

Fed expects GDP growth to slow down to 0.2% in Q4, but climb to 1.2% by 2023. Unemployment rate is expected to climb to 4.4% by 2023.

USD hit a new high against majors and US stock indices tumbled.

Data highlights: – US existing home sales climbed to 4.08 mn.

Thursday’s calendar : – US Weekly jobless claims

USD/INR   80.0179.78
EUR/USD       0.98120.99740.9815
GBP/USD       1.12251.13861.1239
USD/JPY       144.39144.71143.35

Daily Support/Resistance table

Currency PairsPivotR1R2R3S1S2S3
EURO/USD0.98730.99311.00321.00900.97720.97140.9613
GBP/USD1.12941.13491.14401.14951.12021.11481.1056
USD/JPY144.10144.85145.45146.20143.49142.75142.14
USD/INR79.9280.0680.15 79.8379.69 

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency PairSupportsResistancesTrendRemarks
EURO/USD0.98651.0200DNSIDE>1.02
GBP/USD1.1405/1.1270/1.11951.1740/1.19DNSIDE>1.1740
USD/JPY141.50/137.50145UPSIDE<141.50
USD/INR79.82/79.5880.12UPDN<79.58
USD/CHF0.94750.9875SIDEDN<0.9475

Technicals: Spot closed above 200 day major moving averages.20 day moving average is at 79.71. 50 day moving average is at 79.65.200 day moving average is at 76.98. Daily MACD is in buy zone. Important supports are at 79.82/79.58 and important resistance is at 80.12. Spot closed above its average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 79.95, S1:79.84, S2:79.70, R1:80.10, R2:80.20.             

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

However on directional basis, suggest the following:

USDINR imports be hedged at 79.30 and exports be hedged at 79.80+.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below major moving averages. Major resistance is at 1.02/1.0360. Next major support is at 0.9865. Daily MACD is in buy zone, implying an important bottom at 0.9865. 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 1.1740 and weekly MACD is in sell zone, implying important top at 1.3730. Important support is at 1.1405/1.1270. Important resistance is at 1.1740/1.19.

USD/YEN: The pair is above 50 and 200 day moving averages. Daily MACD is in sell zone, implying important top at 145. Important support is at 141.50/137.50. Major resistance is at 145.

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