Rupee Bulls Need Better Data to Add Gains - HDFC Securities
India’s rupee posted its first weekly advance this month as global risk sentiment improves. Hope from thinner geopolitical tails and US China partial deals have driven emerging market currencies higher. Domestic macros have not improved and weakening even after government efforts. Many well-known global agencies cut the growth forecast for the current year and foreign funds are pulling out money from the market. Rupee has been gainer following strength in other Asian currencies and dollar buying by the central bank. India’s Forex reserves touched new land mark of $440.751 billion for the week ended October 18, as per the weekly release by RBI.
* State election results should not have a material impact on markets, although it could push the government to hasten payment to farmers.
* Technically, Spot USDINR is having support around 70.50 and resistance at 71.30.
* From the economic data perspective, government will release the fiscal deficit number and industrial production figures this week.
FOMC And The BoJ’s Rate Decision
This week features a couple of pivotal central bank meetings, led by FOMC meeting on 30th where market expect a 25bps rate cut and the BoJ also follows the same direction with market pricing 20bps cut on 31st. The key global data releases will be US nonfarm payrolls on 1st November, which follows up on last month’s mixed bag. US 3Q GDP due 30th will also be closely watched for signs of further slowing amid the ongoing US China trade war. Other key indictors include Euro area GDP and CPI due 30th and Japan’s October CPI due before the BoJ’s rate decision. Potential developments in Brexit would also be closely monitored by market participants.
* USDINR November futures forming lower highs and lows.
* It has been trading below short term moving averages.
* Momentum oscillators and indicators showing weakness on daily and weekly charts..
* Near term trend of USDINR November futures is bearish.
* We recommend short sell below 70.75 for target of 69.70 with stop loss of 71.60.
USDINR November Futures: Sell Below 70.75 SL 71.60 TGT 69.70
* EURINR November futures has falling trend line resistance at 79.50
* The pair has been trading below short term moving averages with formation of lower highs and lower lows.
* Momentum oscillator, RSI has given negative cross over and heading southward indicating bearishness.
* Short term traders can initiate short sell below 78.70 for target of 77.50 keeping stop loss at 79.75.
EURINR November Futures: Sell Below 78.70 SL 79.75 TGT 77.50
* GBPINR November futures touched four month high with sequence of higher highs and higher lows.
* Momentum oscillator, relative strength index exited from overbought zone but the price confirmation is required for trend reversal which yet to come.
* We believe the current up trend can continue this week with higher side resistance at 93.75 and support 90.50.
GBPINR November Futures: Buy above 92.00 SL 90.50 TGT 93.75
* JPYINR November futures trading below short term moving averages.
* The pair has broken the previous bottom support of 65.45.
* Momentum oscillator, RSI heading downward with negative cross over indicating weakness in pair.
* Short term bias remain bearish with downside support at 63.90 and resistance at 66.80
JPYINR November Futures: Sell around 65.45 SL 66.80 TGT 63.90
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