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Dollar Steadies Ahead of Fed Meeting - HDFC Securities 

Indian rupee expected to open flat following overnight muted price action in dollar against major trading currencies ahead of Federal Reserve policy outcomes. Asian stocks look set for a steady initial start Wednesday as traders evaluate the debt crisis at Evergrande and brace for a Federal Reserve meeting that is expected to transmit a reduction in stimulus.

Risk relief after Evergrande says it has negotiated a coupon payment with holders for Sept. 23. The PBOC have added to the relief factor by adding daily liquidity generously.

U.S. House has voted to suspend the debt limit to December 2022 and temporarily funded the government from a shutdown.

Indian rupee recovered after Monday’s blue following dollar inflows and rebound in risk sentiments. Spot USDINR ended at 73.61 with loss of 13 paise. The pair is expected to trade in the range of 73.85 to 73.40 ahead of FOMC meeting outcomes later tonight.

Longer maturity rupee bonds advanced while the shorter-tenor debt fell after the central bank announced a plan to buy long-duration papers and sell shorter-maturity ones as part of its government securities acquisition program. The 10-year yields dropped 2bps to 6.12%, down 5 bps in the last two days and the yield on the 5.63% 2026 bond rose 3bps to 5.59% on Tuesday.

The Reserve Bank of India plans to buy 150b rupees of 7.17% 2028 bond, 6.1% 2031 bond and 6.64% 2035 bond as part of GSAP on Sept. 23. It plans to sell an equivalent amount of 8.15% 2022 bond, 8.08% 2022 bond, and 8.13% 2022 bond, citing current liquidity conditions.

A gauge of emerging-market currencies fell for the fourth straight day, its longest losing streak since early August, as investors watched the developing crisis at China’s Evergrande and looked ahead to this week’s Federal Reserve meeting. Currency losses were led by the Polish zloty, South African rand and Thai baht.

USDINR

USDINR September futures formed open high pattern, but manage to recover from lower level.

It manages to close above 200 days simple moving average for second day in row even after bearish candlestick.

On Hourly chart, the pair has been tacking support of 55 hours exponential moving average.

Momentum oscillator on hourly chart stayed above 50 and expected to slowly move higher.

The pair has trend line resistance around 73.90 and support at 73.55.

USDINR September futures expected to trade with positive bias after steady opening and we could see level of 73.85 on higher side while hold the support of 73.60.

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