FX Morning Update USD INR July 28, 2023

USDINR opened at 81.93 y’day and the pair traded in the 81.90-82.02 range. Spot USDINR closed at 81.94, loss of 5 ps for USD as against prior close of 81.99.

RBI reference rate was fixed at 81.99 on 27/07. Aug USD/INR closed at 81.99, loss of 11 ps for USD as compared to prior day’s close of 82.10. Aug Euro/INR closed at 91.36, GBP/INR at 106.23 and Yen/INR at 58.80. 1 year USDINR fwd premia was trading at around 1.70% p.a.  FX reserves climbed USD 12 bn last week as compared to prior week and stood at USD 609 bn as on July 14 th.

In July ,FPI’S have bought Rs 43804 Cr of Equities and bought Rs 705 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 declined 118 points (0.60%) y’day. US S&P declined 29 points (0.64%) . Nikkei climbed 0.82% and Hang seng climbed 1.45% y’day

Euro is now at 1.1077, Pound at 1.2829, Yen at 141.37.

Commodities: Gold is now at USD 1963 and WT1Crude at USD 79/Brent at USD 83.

Interest rates: USD 10 Yr yield is at 3.99% and 3 m libor closed at 5.55%. Indian 10 yr benchmark yield closed at 7.09%.

Economic news: The European Central Bank (ECB) raised its Deposit Rate 25 bps to 3.75% at today’s monetary policy announcement. ECB sounded cautious in guidance and was downbeat on growth. ECB Chairperson said that Sept rate decision is open. She said that rates have transmitted forcefully and future rates will be financially restrictive. She added that outlook has deteriorated due to weak external demand.

US GDP grew 2.4% annualized in Q2, according to the “advance” estimate, well above expectation of 1.6%. That’s also a faster growth than Q1’s 2.0% annualized. PCE price index slowed from 4.1% to 2.6% while PCE core price index also fell form 4.9% to 3.8%.

Euro declined below 1.10 after ECB decision. US 10 Year yield surged to 3.99% on robust US GDP data.

Data highlights: US Weekly jobless claims declined to 221k, durables order climbed 4.7% m/m and pending home sales climbed 0.3% m/m.

Friday’s calendar : – US personal income, spending and Core PCE index

Daily Support/Resistance table

MAJOR SUPPORTS/RESISTANCES AND TREND TABLE

Technicals: Spot closed below 50 and 200 day moving averages.20 day moving average is at 82.14. 50 day moving average is at 82.28.200 day moving average is at 82.21. Daily MACD is in sell zone. Important support is at 81.67 and important resistance is at 82.20. Spot closed below the average level of the day.

Intraday supports and resistances for Aug contract are:

PP: 82.02, S1:81.93, S2:81.88, R1:82.07, R2:82.16.             

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

However on directional basis, suggest the following:

USD imports be hedged at 81.85/81.75.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is above major moving averages. Major resistance is at 1.1275/1.1340. Next major support is at 1.1015.. Daily MACD is in sell zone, implying an important top at 1.1275. Weekly MACD is in buy zone, implying important bottom at 1.0635.

GBP/USD: The pair is above 50,100 and 200 day moving averages . Daily MACD is in sell zone, implying important top at 1.3145 and weekly MACD is in buy zone, implying important bottom at 1.1803. Important supports are at 1.2680/1.2590. Important resistance is at 1.3145.

USD/YEN: The pair is above 50 and 200 day major averages. Daily MACD is in buy zone, implying important bottom at 137.35. Important resistance is at 145 and support is at 137.50.

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