Published on 5/12/2019 9:57:32 AM | Source: HDFC Securities Ltd

Eyes on RBI Rate Decision  - HDFC Securities

Posted in Currency Report| #HDFC Securities #Currency Tips

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Eyes on RBI Rate Decision  HDFC Securities

* Indian rupee started with minor gains of 4 paise to 71.49, in line with Asian currencies. Emerging market currencies trading higher after headline news of US China came closure for trade deal. The seesaw movements has been witnessed in forex market based on news of US China trade.

* For our market the focus will be on today’s central bank policy decision. RBI and most of the market participants are concerned about slow transmission of monetary easing to real economy. Since February 2019, RBI has cut the rates by 135 bps and expected to add 25bps in today’s decision. RBI has to take unconventional policy measures as rate cuts are failing to stimulate the economy. We may also see, RBI revising inflation and GDP forecast.

* USDINR has logged single biggest one day drop since November 01 on Wednesday. Technically, spot USDINR is having support at 71.30 and resistance at 72.01.

* On global front, US remains top of the news headlines. Trump administration considers 14000 more troops for Middle East. The news has twin impacts, first on the risk sentiment and the other on commodity i.e. crude oil. Though, no major reaction seen on crude, safe haven currencies and global equity markets.

* The dollar traded slightly lower after Thursday’s gain as upbeat trade comments cheered the market.

* The British pound crossed the $1.31 mark for the first time since May overnight as expectations that Prime Minister Boris Johnson would win a majority at next week’s election firmed.



* USDINR December futures consolidating near short term moving average of 21 days.

* Momentum oscillator, RSI given negative cross over indicating further weakness.

 * We may see volatile session in today’s trade amid central bank policy decision.

* Near term support has been placed at 71.40 and resistance at 72.10.





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