Published on 17/09/2020 9:30:23 AM | Source: HDFC Securities Ltd

Dollar gains as Fed turned out to be less dovish than expected - HDFC Securities

Posted in Currency Report| #HDFC Securities #Currency Tips

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Dollar gains as Fed turned out to be less dovish than expected HDFC Securities

* Indian rupee expected to open steady after profit booking in global equities after fed’s held the interest rate near zero for next three years. Technically, spot USDINR is consolidating in range of 73.80 to 73.40.

* Indian rupee gained in line with other Asian peers and in particular stronger Chinese Yuan. Expectation of dollar inflows from upcoming IPO and weaker dollar index supported rupee. Local currency gained 12 paise to 73.53 a dollar.

* Indian bonds advance by the most in a week after RBI Governor Shaktikanta Das reiterated that the monetary authority will take steps as needed. The 10-year bond yield fell 4bps to 5.99%.

* The dollar gained as some traders covered short positions after the Federal Reserve turned out to be less dovish than they expected. The Bloomberg Dollar Spot Index rose 0.1%, set for its first gain in five days. Federal Reserve officials held interest rates near zero and signaled they would stay there for at least three years, vowing to delay tightening until the U.S. gets back to maximum employment and 2% inflation.

* Asian stocks headed for a cautious start Thursday after the Fed's Powell said he’s not sure if the faster-than-expected recovery will continue.


Technical Observations:

USDINR September Futures hovering around 5 and 13 DEMA

* The pair is in consolidation zone of 74.15 to 73.50.

* Momentum Oscillator, RSI of 14 days period also placed at 42.

* The over all trend for the pair remains down but oversold condition on daily and four hourly chart could support short covering bounce

* The expected trading range for today would be 73.80 to 73.40.



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