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Dollar Pops over Geopolitical worries and Hawkish Fed Members

* Taking cues from the regional currencies, the Indian rupee could open lower at domestic bourses. The overnight gain in the dollar index, higher crude oil prices, foreign fund selling in equities and corporate dollar outflows continue to weigh on the domestic currency.

* On Thursday, spot USDINR gained 23 paise or 0.29% to 79.68. The pair consolidating in the narrow range of 79.20 to 79.85 since August 04. Today could be the day where we can see an upward breakout following weekly expiry and risk-averse sentiments. However, the medium-term consolidation can continue before the decisive up trend.

* Asia currencies to weaken further versus the dollar in coming weeks amid ongoing global growth fears and the possibility of more hawkish Federal Reserve rhetoric.

* A gauge of the dollar’s strength rose to the highest this month amid global risk aversion after mixed economic and geopolitical tension left money managers assessing the path of monetary policy in the US.

* A greenback gauge hovered around a one-month high. Indonesian President Joko Widodo said China’s Xi Jinping and Russia’s Vladimir Putin plan to be at a Group of 20 summits in Bali later this year. That sets up a showdown with US President Joe Biden and other leaders as Russia continues its war in Ukraine.

* Asian stocks mostly fell with US futures amid the hawkish signals from Fed officials. Later Friday, a $2 trillion options expiration could stir volatility.

* Several Fed officials pushed back against any notions the tightening cycle might be nearing an end. Authorities have more to do, Neel Kashkari said, warning he wasn't sure inflation could be tamed without a recession. The pace of hikes, however, will be further debated, Esther George said. Mary Daly and James Bullard favour an increase in September of up 75 bps; Daly told CNN ratesshould be "a little" above 3% by year-end.

USDINR

Technical Observations:

* USDINR August futures has been trading in a narrow range of 79.40 to 79.95 since August 04.

* The pair is hovering around 21 days exponential moving average (DEMA) and holding the support of 55 DEMA i.e. 79.27.

* Relative Strength Index of 14 days oscillating around 50 and given a negative crossover suggesting consolidation.

* MACD is placed above zero line but remained below average indicating sideways trends.

* We have seen short covering on Thursday as the price gained while open interest declined. • USDINR August futures could consolidate in the range of 79.30 to 79.90 for a few more days.

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