FX Morning Update USD INR October 30, 2023

USDINR opened at 83.22 y’day and the pair traded in the 83.20-83.26 range. Spot USDINR closed at 83.25, unchanged for USD as against prior close of 83.25.

RBI reference rate was fixed at 83.25 on 27/10. Nov USD/INR closed at 83.30, loss of 2 ps for USD as compared to prior day’s close of 83.32. Nov Euro/INR closed at 87.98, GBP/INR at 100.99 and Yen/INR at 55.86. 1 year USDINR fwd premia was trading at around 1.74% p.a.  FX reserves declined by USD 2.36 bn and stood at USD 583.50 bn as on Oct 20 th.  Foreign Currency assets decreased by USD 4.15 bn last week, due to USD rally.

In Oct, FPI’S have sold Rs 17488 Cr of Equities and bought Rs 5221 Cr of debt . In 2022-23 fiscal year, FII’S have net sold Rs 27593 Cr of Equities and have net bought Rs 838 Cr of debt.

Benchmark Nifty climbed 190 points (1.01%) Y’day. US S&P declined 19 points (0.48%) . Nikkei climbed 1.38% and Hang Seng climbed 2.14%.

Euro is now at 1.0566, Pound at 1.2123, Yen at 149.65.

Commodities: Gold is now at USD 2006 and WT1Crude at USD 85/Brent at USD 90.50.

Interest rates: USD 10 Yr yield is at 4.845% and 3 m libor closed at 5.65%. Indian 10 yr benchmark yield closed at 7.35%.

Economic news:  Rupee consolidated in a narrow range as selling pressure from foreign equity investors continued to weigh on Rupee. Sliding Equity markets, FII’s pullout amidst surging US Yields and RBI’S action continued to impact on USDINR pair both sides.

US PCE price index rose 0.4% mom, above expectation of 0.3% mom. Core PCE price index (excluding food and energy) rose 0.3% mom, matched expectations. Annually, PCE price index was unchanged at 3.4% yoy, matched expectations. Core PCE price index slowed from 3.8% yoy to 3.7% yoy, matched expectations.

Focus is on US Fed meeting outcome. Fed is expected to hold rates, but maintain hawkish tone. Fed’s concern will be on resilient consumer spending and sticky core inflation.

Data highlights: – US Personal income climbed 0.3% m/m, spending  climbed 0.7% m/m and Core PCE index climbed 0.3% m/m.

Monday’s calendar : – No major data release.

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed above 50 and 200 day moving averages.20 day moving average is at 83.22. 50 day moving average is at 83.06.200 day moving average is at 82.45. Daily MACD is in sell zone. Important support is at 83.03/82.80 and important resistance is at 83.35. Spot closed above the average level of the day.

Intraday supports and resistances for Nov contract are:

PP: 83.30, S1:83.28, S2:83.26, R1:83.32, R2:83.34.             

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

However on directional basis, suggest the following:

USD exports be hedged at 83.30/83.50. Imports be hedged at 83.10 for 3 months.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below 100/200 day moving averages. Major resistance is at 1.0695/1.0815. Next major support is at 1.0450. Daily MACD is in buy zone, implying an important bottom at 1.0450. Weekly MACD is in sell zone, implying important top at 1.1275.

GBP/USD: The pair is below 50 and 200 day averages. Daily MACD is in buy zone, implying important bottom at 1.2035 and weekly MACD is in sell zone, implying important top at 1.3145. Important support is at 1.2035/1.18. Important resistance is at 1.2330/1.2440.

USD/YEN: The pair is above 50 and 200 day major averages. Daily MACD is in sell zone, implying important top at 150.80. Important resistance is at 150.80 and support is at 147.50/146.50.