FX – MORNING UPDATE :
FX Morning Update August 05, 2024
USDINR opened at 83.74 on Friday and the pair traded in the 83.72-83.77 range. Spot USDINR closed at 83.75, gain of 1 ps for USD as against prior close of 83.74.
RBI reference rate was fixed at 83.74 on 02/08. Aug USD/INR closed at 83.81, unchanged for USD as compared to prior day’s close of 83.81. Aug Euro/INR closed at 90.79, GBP/INR at 106.86 and Yen/INR at 56.34. 1 year USDINR fwd premia was trading at around 1.84% p.a. FX reserves stood at USD 667 bn, as on July 26 th. Reserves declined by US D 3.5 bn w/w.
|
PAIRS |
RBI REF RATE (02/08) |
|
USDINR |
83.74 |
|
EURINR |
90.46 |
|
GBPINR |
106.64 |
|
JPYINR |
56.15 |
In July , FPI’S have bought Rs 27957 Cr of Equities and bought Rs 21863 Cr of debt . In FY 23-24, FII’S have net bought Rs 206279 Cr of Equities and have net bought Rs 123120 Cr of debt.
Benchmark Nifty climbed 293 points (1.17%) on Friday. US S&P declined 100 points (1.84%). Nikkei declined 5.73% and Hang Seng declined 2.08% on Friday.
Euro is now at 1.0908, Pound at 1.2798, Yen at 146.54.
Commodities: Gold is now at USD 2442 and WT1Crude at USD 74/Brent at USD 77.50.
Interest rates: USD 10 Yr yield is at 3.80% and 3 m libor closed at 5.51%. Indian 10 yr benchmark yield closed at 7.04%.
Economic news: US employment report was weaker than expected, triggering recessionary fears. This coupled with contractionary ISM (mfrg) data has increased uncertainty over US economy. US Yields declined over 20 bps and Equity markets collapsed. USD declined against majors.
US non-farm payroll employment grew only 114k in July, well below expectation of 176k. That’s all well below average monthly gain of 215k over the prior 12 months.Unemployment rate jumped from 4.1% to 4.3%, above expectation of 4.1%. Participation rate ticked up by 0.1% to 62.7%. Average hourly earnings rose 0.2% mom, below expectation of 0.3% mom. Annual wages growth slowed from 3.8% yoy to 3.6% yoy, below expectation of 3.7% yoy.
The market’s reaction to mfrg and employment reports has shifted expectations towards more aggressive monetary easing. Investors are now starting to bet on a 50bps rate cut by Fed in September, and more rate cuts in Nov and Dec. However, rather than cheering the potential for fast monetary easing, investors seem more concerned about a looming recession.
Japanese stock market index decline continued with Nikkei falling 5% on Friday. Yen has swiftly gained to 146.50 as carry trades are being unwound.
Indian GST Collections grew by 10.3% to Rs 1.82 lac Cr in July. Core sector climbed 4% in June.
Data highlights: – -US ISM(services)
-EU PPI, PMI(services-final)
-UK PMI(services-final)
Monday’s calendar : – US nonfarm payrolls and factory orders.
|
USD/INR |
|
83.77 |
83.72 |
|
|
EUR/USD |
1.0908 |
1.0927 |
1.0782 |
|
|
GBP/USD |
1.2798 |
1.2841 |
1.2706 |
|
|
USD/JPY |
146.54 |
149.77 |
146.41 |
Daily Support/Resistance table
|
Currency Pairs |
Pivot |
R1 |
R2 |
R3 |
S1 |
S2 |
S3 |
|
EURO/USD |
1.0872 |
1.0962 |
1.1017 |
|
1.0817 |
1.0727 |
|
|
USD/JPY |
147.57 |
148.73 |
150.93 |
|
145.37 |
144.21 |
|
|
GBP/USD |
1.2781 |
1.2857 |
1.2916 |
|
1.2721 |
1.2646 |
|
|
USD/INR |
83.75 |
83.77 |
83.81 |
|
83.73 |
83.70 |
|
MAJOR SUPPORTS/RESISTANCES AND TREND TABLE
|
Currency Pair |
Supports |
Resistances |
Trend |
Remarks |
|
EURO/USD |
1.08/1.0760 |
1.0950/1.1040 |
SIDE |
DN<1.0760 |
|
GBP/USD |
1.2705/1.2650 |
1.3050/1.3150 |
SIDE |
DN<1.2650 |
|
USD/JPY |
146 |
149/152 |
DN |
SIDE>152 |
|
USD/INR |
83.56/83.45/83.34 |
83.90/84.02 |
UP |
SIDE<83.56 |
|
USD/CHF |
0.8730 |
0.9050 |
DN |
UP>0.9050 |
Technicals: Spot closed above 50 and 200 day moving averages.20 day moving average is at 83.64. 50 day moving average is at 83.52. 200 day moving average is at 83.28. Daily MACD is in buy zone. Important support is at 83.56/83.34 and important resistance is at 83.90. Spot closed at the average level of the day.
Intraday supports and resistances for July contract are:
PP: 83.80, S1:83.76, S2:83.72, R1:83.84, R2:83.88.
Hedging strategy: Hedging decisions be taken according to comfort and accounting rates.
However on directional basis, suggest the following:
USD exports be hedged.
CROSS CURRENCY TECHNICALS:
EURO/USD: The pair is above major moving averages. Major resistance is at 1.0950/1.1040. Next major support is at 1.0775. Daily MACD is in sell zone, implying an important top at 1.0950. Weekly MACD is in buy zone, implying important bottom at 1.06.
GBP/USD: The pair is above major moving averages. Daily MACD is in sell zone, implying important top at 1.3050 and weekly MACD is in buy zone, implying important bottom at 1.23. Important support is at 1.2705/1.2650. Important resistance is at 1.3050/1.3150.
USD/YEN: The pair is below major averages. Daily MACD is in sell zone, implying important top at 162. Important resistance is at 149/152 and support is at 146.
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