Published on 17/07/2019 10:22:36 AM | Source: HDFC Securities Ltd

Foreign Funds Outflows To Weigh On Rupee - HDFC Securities

Posted in Currency Report| #HDFC Securities #Currency Tips

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Foreign Funds Outflows To Weigh on Rupee - HDFC Securities

*  Most Asian currencies came under downward pressure as better than expected US economic data and a drop in oil prices boosted the dollar. Rupee may turn volatile in today’s trade as higher dollar prices may put pressure while lower crude oil will support.

*  The risk sentiment will weigh on as gauge of equities decline as President Trump said he could impose more tariffs on China, while US signaled a possible easing of tension with Iran. Crude oil tumbled 3.3% to 64.35 a barrel on Tuesday, adding to Monday’s 1.1% decline.

*  Spot USDINR posted a bullish close above the upper bound of the downward channel, which may see further gains and make the July low a short-term base. The pair is having support at 68.44 and resistance at 69.03.

*  Indian bonds may extend a rally that has pushed yields to multi-year lows. Benchmark 10-year bonds gained for a fifth day Tuesday with yields falling as much as 12bps to 6.31%, the lowest December 2016.

*  Cumulative monsoon rainfall is 14% below normal as of July 16 as per the India Meteorological Department statement. This will further give room for rate cut to central bank.

*  Global funds bought a net 7.5b rupees of Indian govt. bonds and 1.1b rupees of corporate debt while they sold 4.4b rupees of local stocks as per the provisional NSE data.

*  The pound dropped against all its G-10 peers, dragged lower amid Brexit concerns, while the euro was also a laggard, weighed down by a weaker-than-expected German confidence survey




USDINR July futures formed bullish candle after inside bar indicating bulls having upper hand.

However, the trend is still bearish amid lower highs and lows formation.

The pair has been trading well below short term moving averages. Momentum indicators are showing sign of positivity indicating near term short covering.

Near term resistance is placed at 69.10 and support at 68.30.


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