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Indian rupee snaps two days of losses on hopes of inflows - HDFC Securities 

USDINR

Technical Observations:

With risk assets on back footing dollar is stronger pretty much across the board. We could see dollar buying into month end following higher commodity prices, particularly crude oil. However, this could be short lived as there are series of IPS starting this weekend which will pour dollar in the system and limit lower side of rupee.

Indian rupee snaps two days of losses on hopes of inflows ahead of initial share sales by companies and as stocks gains. Spot USDINR closed 0.2% lower to 74.9588 after rising as much as 0.1% earlier. Sovereign bonds ended lower amid absence of any announcement of buying support by the central bank. India 10-year bond yields rose 1bp to 6.36% and 5-year yield up 1bp to 5.74%.

Technically, spot USDINR is expected to start higher but could resist around 75.25 level ahead of month end settlement. While on downside we could see 74.80 acting as support for the day.

A gauge of the dollar climbed, erasing earlier losses as U.S. equities came off session highs. Meantime, a two-year U.S. Treasury auction saw strong demand while short-end yields ticked higher for the day as the curve flattened. Asian stocks look set to dip as traders weighed the latest U.S. earnings reports amid lingering concerns about growth risks from elevated inflation and China’s indebted property sector.

Oil prices continued to edge higher yesterday, leaving Brent in striking distance of the 2018 highs. The market will keep a close eye on weekly EIA numbers, which will be released later today.

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