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Published on 2/09/2020 10:06:07 AM | Source: HDFC Securities Ltd

Rupee gains on fund inflows and absence of central bank intervention - HDFC Securities

Posted in Currency Report| #HDFC Securities #Currency Tips

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Rupee gains on fund inflows and absence of central bank intervention -  HDFC Securities 

Indian rupee expected to start with minor gain following overnight recovery in dollar index. The dollar erased losses as data showed U.S. manufacturing expanded last month at the fastest pace since 2018. The euro fell 0.7% to session low of 1.1905; reversed 0.6% advance to $1.2011, highest since May 2018. The move in the currency above $1.20 drew in relentless sales to take profits by leveraged accounts while corporate accounts sold the pair. Comments from ECB’s Lane put further pressure on the currency and pushed it lower.

Spot USDINR expected to witness short covering following rebound in the dollar against major currencies. Technically, spot USDINR is having support around 72.50 and resistance at 73.50.

On Tuesday, rupee closed at 72.87 a dollar, up 1.03% from its previous close of 73.62. The 10-year bond yields fell 18 basis points to close at 5.942% from its previous close of 6.117%. While announcing the bond market related measures on Monday post market hours, the central bank had observed that the “recent appreciation of the rupee is working towards containing imported inflationary pressures.”

Emerging-market currencies and stocks rebounded after U.S. and Chinese data bolstered confidence that a global economic recovery is on track. MSCI Inc.’s index of developing-nation currencies rose to the highest in six months as the dollar touched a two-year low.

 

Technical Observations:

USDINR September Futures broke the Doji candle low confirmed the downside. However, the short covering bounce may come in coming days amid oversold condition on hourly and four hourly chart.

Momentum Oscillator, RSI of 14 days period entered in the oversold zone .

We expect USDINR September futures expected to erase some losses in today’s trade following broad based dollar movement.

The pair is having support at 72.70 and resistance at 73.90, the eight days exponential moving average.

 

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