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Published on 18/08/2022 10:40:16 AM | Source: HDFC Securities Ltd

Dollar Retreats after FOMC minutes - HDFC Securities

Posted in Currency Report| #HDFC Securities #Currency Tips

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Dollar Retreats after FOMC minutes

* Indian rupee could open slightly higher following overnight weakness in the dollar index after the FOMC meeting. On Wednesday, spot USDINR ended at 79.45 with a loss of 21 paise or a quarter percentage point. In the near term, spotUSDINR is expected to consolidate in the range of 79.10 to 79.85.

* A gauge of the greenback’s strength trimmed gains after minutes from the Federal Open Market Committee’s July meeting showed policymakers saw a slower pace of interest-rate hikes atsome point.

* Asian shares fell with US futures amid worries about China's growth outlook. Key indexes in Japan and South Korea were showing losses of close to 1%. US Treasuries recovered a tad from the global bond drop triggered by a surge in UK inflation. Oil retreated after rebounding overnight on a bullish US stockpiles report.

* Treasury two-year yields pared most of their surge after the latest Federal Reserve meeting minutes showed officialssignaled the potential for smaller rate hikes at one point.

* The FOMC weighed the risk of not raising rates enough to cool inflation against the danger of raising borrowing costs more than needed, causing unwarranted economic weakness. Ultimately officials agreed on the need to eventually dial back the pace of rate hikes while monitoring the effect of tightening already undertaken, minutes fromthe July meeting showed.

* Meanwhile, the US and Taiwan started formal negotiations on a bilateral trade initiative, a step which risksinflaming already high tensions with China.

USDINR

Technical Observations:

* USDINR August futures closed slightly above the upward slopping trendline adjoining the previous swing low of 78.69, 79.04 and 79.24.

* The pair is oscillating around 21 days exponential moving average (DEMA) and holding the support of 55 DEMA i.e. 79.26.

* Relative Strength Index of 14 days oscillating around 50 and given negative crossover suggesting consolidation.

* MACD is placed above zero line but flattened indicating a sideways trend.

*  Long unwinding has been seen in USDINR as price and open interest declined.

* USDINR August futures could consolidate in the range of 79.30 to 79.90.

 

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