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Dollar Drops; Asian Currencies Regains Strength

* The U.S. dollar weakened, continuing the previous session’s selloff after U.S. inflation eased more than expected, while sterling edged higher after a small third-quarter growth contraction.

* This bout of dollar weakness has stemmed from Thursday’s data showing U.S. CPI inflation grew 7.7% in October, its slowest pace in nine months, suggesting the series of sharp interest rate hikes by the Federal Reserve this year were finally having their desired effect.

* This raised expectations that the Fed policymakers may decide to temper the central bank’s aggressive monetary tightening campaign earlier than previously anticipated, potentially hiking by only 50 basis points in December instead of another 75 bps increase. Most Asian currencies rose sharply on Friday, while the dollar hit a two-month low as softer-than-expected U.S. inflation data ramped up expectations that the Federal Reserve will slow its pace of interest rate hikes.

* Sentiment was also aided by Hong Kong relaxing some COVID curbs, which spurred renewed speculation that China could do the same in the near-term. China’s Yuan rose 0.3% to 7.1669 against the dollar, its strongest level in over two weeks. Local stock markets rallied on the prospect of some relaxation in COVID curbs.

* But Chinese authorities have dismissed recent speculation over such a move, as the country faces its worst outbreak since May. Broader Asian currencies rose, while the dollar sank as investors positioned for a smaller interest rate hike by the Fed in December. The South Korean won was the best performer in Asia, rising 1.7% to a near three-month high, while the Malaysian ringgit led gains across Southeast Asia with a 1.2% jump

USDINR Technical Observations:

* USDINRNov Futfell for the third consecutiveweek to close at 80.80

* Pair has breached importantsupport of 20, 50 and 100 days EMA

* Next supportfor the pair is seen at 79.5-80

* Resistance for the pair hasshifted down to 82.50

* Pullbacksshould be utilized to exit long positions

* Trend is likely to remain bearish for the USDINRNov Future

EURINR Technical Observations:

* EURINR Nov Fut has been forming higher tops and higher bottoms on the daily chart

* Pair has been finding support on its 20 days EMA

* Pair has broken out frombullish cup and handle pattern on the daily chart

* Trend is likely to remain bullish for the Pair

* Dipsshould be utilized to accumulate longsin the pair

* Resistance for the pair isseen at 84, while supportisseen at 82

GBPINR Technical Observations:

* GBPINR Nov Fut has been forming higher tops and higher bottoms on the daily chart

* Pair has been finding support on its 20 days EMA

* Pair is on the verge ofsurpassing 100 days EMA resistance placed at 95

* Trend is likely to remain bullish for the Pair

* Dipsshould be utilized to accumulate longsin the pair

* Resistance for the pair isseen at 96, while supportisseen at 92.50

JPYINR Technical Observations:

* JPYINR Nov Fut hassurpassed previoustop resistance of 57.28

* Bullish inverted head and shoulder breakoutis seen on the daily chart

* Indicators and oscillators have turned bullish on daily chart

* Trend is likely to remain bullish for the Pair

* Dipsshould be utilized to accumulate longsin the pair

* Resistance for the pair isseen at 60, while supportisseen at 56.80

Observations:

• Maximum pain is at 82.5 strikes with 82.5 CE OI 3.15 lakh and 82.5 PE OI 2.39 lakh

• In the week gone, 81.5 CE registered high OI addition.

• Call writer has been active at 81 and 81.50 strikes.

• Put writing has been seen at 80 strikes.

• The put call ratio rose to 0.85% from start of the series 0.77 and previous week’s 0.72.

• Looking at the option distribution, USDINR Nov. futures could oscillate around 81.5 with downside support at 80

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