Published on 5/08/2020 9:24:01 AM | Source: HDFC Securities Ltd

Rupee expected to open higher on weaker greenback - HDFC Securities

Posted in Currency Report| #HDFC Securities #Currency Tips

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Rupee expected to open higher on weaker greenback -  HDFC Securities

* Indian rupee expected to open higher amid weaker greenback against major trading currencies. The forward market suggests gain of 15 paise from the close of domestic market. Overnight, dollar index fell to 93.18 from 93.55 at 5pm IST.

* On Tuesday, rupee pared losses after touching the lowest level in two weeks as exporters stepped up USD selling. Spot USDINR rose 0.1% to close at 75.0450 on Tuesday after touching 75.18, highest since July 17. Rupee is lacking directional cues and investors await announcements from the RBI policy meeting later this week.

* The yield on 5.79% 2030 bond fell 1bp to 5.84% on Tuesday, while that on the new 10-year bond issued last week was little changed at 5.77%

* The theme of a weak dollar has been refreshed, setting up a favorable mood for Asian stocks and currencies. The Dollar Spot Index turned lower Tuesday, snapping a two-day advance and helping stocks rise together with Treasuries and gold. The gauge’s decline may accelerate now that it’s broken through a trend line that had been in place from 2011. Asian stocks looked set for modest declines Wednesday as investors mulled the progress of stimulus talks in Washington and reports of a plan to review the U.S.-China trade deal. Senior U.S. and Chinese officials are planning to assess the nations’ phase-one trade agreement this month against a backdrop of rising tensions between the countries, according to people briefed on the matter.

Technical Observations:

* USDINR August Futures formed inside bar after strong bullish candle indicating consolidation.

* The pair closed well above short term moving averages.

* It has formed double bottom formation around 74.50 and resistance at 75.70.

* Momentum Oscillator, RSI of 14 days period heading towards north suggesting continuation of positive momentum.

* USDINR August futures expected to consolidate in the range of 75.50 to 75.00 in coming days


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