WEEKLY SYNOPSIS: 14/08/2020
|Currency Pairs||WEEKLY CLOSE||PRIOR WEEK CLOSE||% change|
Brent Crude closed at USD 44.95VS prior week close of USD 44.64.
Nifty closed at 11178 vs prior week close of 11214.
10 Year G-SEC Yield closed at 5.96%.
Major developments:USDINR traded in the 74.75-74.97 range and closed at 74.90, gain of 3 psfor Rupee w/w. EUR and GBP declined marginallyagainst Rupee. Indian Equity markets declined 0.32% w/w basis. 10 Year G-SEC Yield closed at 5.96%.
Rupee is still stuck above 74.50 and the range is compressed with daily range of around 10 ps. RBI’S constant USD buying seems to be the prime reason for Rupee’s sideways movement. Expect USDINR to trade in the 74.50-75.50 zone.Indian Equity indices struggled at higher levels and is looking ripe for correction.
IIP picked up in July and auto sales was encouraging. Localised lock downs is hurting supply chains and is a drag on manufacturing activity. Inflation is elevated and is above mandated level of 6%. RBI would maintain status quo in its October meeting.10 Year G-SEC yield climbed 8 bps after CPI data release.
Indian IIP climbed in July as compared to June, but still -16% down y/y. Consumer nondurables grew by 14% due to rural demand. Indian CPI spiked to 6.93% in July due to higher food prices. Food inflation rose to 9.62%.
FII’S have nett bought Rs 15316 Cr ofIndian Equities in August till date . FII’S have nett bought Rs 1372 Cr of Indian debt securities in August till date. In FY 19-20, FII’s have sold Rs 10200 Cr of Equities and 47393 cr of debt.
Global developments:USD was range bound and Gold corrected steeply even as Equities oscillated, despite stalemate in US Congress over stimulus package.
EU and US GDP data for last quarter contracted deeply, but mfrg is back in full swing in Europe and it is expected that Q3 will show steep growth, indicating a possible V-shaped recovery.Q2 EU GDP contracted -15% y/y and -12.1% q/q. Employment declined -2.8% q/q. Germany’s Economy Ministry said the country is “back on the road to recovery” since tough shutdown was eased since May. Industry’s “rapid catching-up” is continuing, largely driven by automotive sector.
UK GDP climbed 8.7% m/m.US retail sales data was encouraging, despite lock down in many parts of the country. Focus for this week will be on FOMC minutes.
Important developments in coming week:EU, UK and US PMI(flash) mfrg data.
Currency range forecast:USDINR:74.50(support)-75.50(Resistance),EURINR: 87(support)-89(Resistance), GBPINR: 97(support)-99(Resistance), JPYINR: 69-71.50.
Suggestion: Cover USD import payables on decline to 74.50.USD receivables can be hedged at 75.25+.EURINR payables can be hedged at 87/86. EURINR receivables hedging can be considered partially at 89+ and again at 91. GBPINR receivables hedging can be part done at 98+.