IGI Logo

Better Than Expected CPI Print Could Support Indian Bond - HDFC Securities

* Rupee expected to open slightly lower following overnight rebound in dollar index following weaker US economic data. The dollar rose with Treasury yields after data showing a decline in jobless claims and an increase in producer prices.

* While at home, better than expected CPI print and RBI’s Bond buying likely to provide some relief in bond yields while rupee expected to continue it’s lackluster trading for another day in absence of fresh triggers.

* The forward markets indicated rupee could open 3-5 paise lower from previous close of 74.26. However, the momentum remains muted following foot step of other Asian currencies. Asian shares looked set for a muted open as the spread of the delta variant and China’s regulatory curbs subdue sentiment despite another record close on Wall Street.

* Indian Rupee gained 19 paise to 74.26 a dollar following weaker dollar index and higher domestic equities, which marked another life time high.

* Technically, spot USDINR is expected to stay in the range of 74 to 74.40 with bias remains on downside as it has been trading below short term moving average with momentum remaining negative on daily chart.

* India’s retail prices increased at the slowest pace in three months in July, taking the pressure off its inflation-targeting central bank that’s facing questions about its easy monetary policy to support economic growth. Consumer prices rose 5.59% last month from a year earlier compared to 6.26% in June, compares with forecast for a 5.72%.

* India’s industrial production slowed to 13.6% y-o-y in Jun-21 from a downwardly revised 28.6% in May-21, as the support from a favorable base waned. However, on a sequential basis IIP growth rose by 7.6% in June-21 from a contraction of 11.5% m-o-m in May-21.

USDINR

Technical Observations:

* USDINR August futures formed another Doji candles but this time direction is bearish side as upper shadow is slightly bigger indicating bears’ aggressiveness.

* The pair has been facing resistance at 21 Days Exponential Moving Averages.

* It has been trading in bearish sequence of lower top lower bottom with double top resistance at 75.35.

* Momentum oscillator, relative strength index of 14 days placed at 42 and heading towards oversold zone indicating downward momentum.

* USDINR August futures has support at 74.25 and resistance at 74.50. The view remains on bearish side until it sustain above 74.70 while on downside it has strong support at 74.25.

USDINR August Daily Chart

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer