FX MORNING UPDATE

USDINR opened at 81.80 y’day and the pair traded in the 81.74-81.85 range. Spot USDINR closed at 81.85, gain of 18 ps for USD as against prior close of 81.67.

RBI reference rate was fixed at 81.81 on 23/11. Nov USD/INR closed at 81.96, gain of 17 ps for USD as compared to prior day’s close of 81.69. Nov Euro/INR closed at 84.57, GBP/INR at 97.75 and Yen/INR at 57.93. USDINR fwd premia was trading at around 2.12% p.a.  FX reserves stands at USD 544 bn as on Nov 11th.  FX reserves rose by USD 14 bn as compared to previous week..

PAIRSRBI REF RATE (23/11)
USDINR81.81
EURINR84.49
GBPINR97.26
JPYINR57.88

In Nov, FII’S have bought Rs 23468 Cr of Equities till date and have bought Rs 1605 Cr of debt till date. In this Calendar Year, FII’S have sold close to Rs 1.14 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 23 points (0.13%) y’day. DOW climbed 95 points y’day (0.28%). Nikkei climbed 0.61% and Hang Seng climbed 0.57% y’day.

Euro is now at 1.0428, Pound at 1.2092, Yen at 138.85.

Commodities: Gold is now at USD 1754 and WT1Crude at USD 78/Brent at USD 85.

Interest rates: USD 10 Yr yield is at 3.69% and 3 m libor closed at 4.67%. Indian 10 yr benchmark yield closed at 7.29%.

Economic news: UD declined against majors soon after Fed minutes release, which indicated slower pace of rate hikes. Fed minutes revealed that Federal Reserve officials earlier this month agreed that smaller interest rate increases should happen soon as they evaluate the impact policy is having on the economy. The summary noted that a few members indicated that “slowing the pace of increase could reduce the risk of instability in the financial system.” Others said they’d like to wait to ease up on the pace. Officials said they see the balance of risks on the economy now skewed to the downside.

Markets expect a few more rate hikes in 2023, taking the funds rate to around 5%, and then possibly some reductions before next year ends.

German Bundesbank in its monthly report said “all in all, despite the higher than expected economic activity in the summer quarter, a recession in the German economy is to be expected in the winter half-year.” Downward forces should “clearly predominate in the coming months”. ECB Vice-President said that, “we will continue to raise interest rates to a level that allows us to ensure that inflation converges towards our definition of price stability.”

UK and EU PMI’s were in contraction mode, indicating negative GDP  in coming quarters.

Data highlights: – US Durables order climbed 1% m/m, New home sales climbed to 632k and Weekly Jobless claims climbed to 240k.

-EU PMI(mfrg) and PMI(services) were reported at 47.3 and 48.6 respectively. Both remained in contraction mode.

-UK PMI(mfrg) and PMI(services) were reported at 46.2 and 48.8 respectively, both in contraction mode.

Thursday’s calendar : – No major data release

USD/INR   81.8581.74
EUR/USD       1.04281.04191.0297
GBP/USD       1.20921.20811.1873
USD/JPY       138.85141.62139.18

Daily Support/Resistance table

Currency PairsPivotR1R2R3S1S2S3
EURO/USD1.03781.04591.05001.05811.03371.02561.0214
GBP/USD1.20101.21471.22181.23561.19391.18021.1731
USD/JPY140.01140.84142.45143.28138.40137.57135.96
USD/INR81.8181.8981.92 81.7781.70 

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Currency PairSupportsResistancesTrendRemarks
EURO/USD1.02/1.011.0430UPSIDE<0.9935
GBP/USD1.1650/1.13351.20/1.22UPSIDE<1.16
USD/JPY135.50145DNSIDE>140.40
USD/INR80.5081.90/82.20SIDEUP>82.25
USD/CHF0.9370/0.90900.9650/0.9720DNSIDE>0.9770

Technicals: Spot closed above 50, 200 day major moving averages.20 day moving average is at 81.97. 50 day moving average is at 81.57.200 day moving average is at 78.07. Daily MACD is in sell zone. Important support is at 80.50 and important resistance is at 81.90. Spot closed above its average level of the day.

Intraday supports and resistances for Nov contract are:

PP: 81.87, S1:81.77, S2:81.60, R1:82.05, R2:82.14.             

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

However on directional basis, suggest the following:

Exports be hedged . Imports be hedged at 80.75.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is above 50 and 20 day major moving averages. Major resistance is at 1.0470. Next major support is at 1.02/1.01. Daily MACD is in buy zone, implying an important bottom at 0.9535. Weekly MACD is in buy zone, implying important bottom at 0.9535.

GBP/USD: The pair is above 50 and 20 day moving averages. Daily MACD is in buy zone, implying important bottom at 1.1150 and weekly MACD is in buy zone, implying important bottom at 1.0380. Important support is at 1.1650. Important resistance is at 1.20/1.22.

USD/YEN: The pair is below 20, 50 and 100 day moving averages. Daily MACD is in sell zone, implying important top at 152. Important support is at 135.50. Major resistance is at 140.40/145.

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