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Rupee Falls as Crude Oil Eying $100

* Indian rupee marked a fourth weekly decline in a row following the sharp surge in crude oil prices and foreign institutions turned net sellers after the delay of India’s bond inclusion in the JP Morgan Global Bond Index. Apart from the broad-based dollar strength, the Key data releases this week suggest the Indian economy is slowing while the US is still on strong footing. The interest rate differential, rebound in commodity prices and surging deficit all could weigh on the Indian rupee in the near term.

* Central Bank: Currency traders are playing cat and mouse with officials abroad as foreign-reserve depletion and intervention come to the forefront. The dip-buying in the greenback against the rupee remained a popular trade last week anticipating RBI would limit intervention in order to preserve foreign-reserve balances.

* USDINR Outlook: In the week gone, spot USDINR gained 98 paise or 1.21% to 82.33, the new all-time high level. The fundamentals and technical are favouring bulls in the coming days. We remain bullish on USDINR and expect levels of 82.80 and 83.50 in the coming days while on the lower side could find support around 81.10.

* Dollar Bullish Bets: The dollar’s strength on the back of US jobs data pulled most major currencies lower last week. The dollar rally means the global economy, particularly emerging and frontier markets, face tightening financial conditions.

* Fed Rate Hike Probability: Fed-hike premium continued to edge higher over the session and almostfully priced in a 75bp rate increase on Nov. 2.

* CFTC Data: In FX, flows were mixed. speculators added to euro longs, buying 9.9k while covering 6.9k AUD shorts. Meanwhile, they sold sterling (3.1k), CAD (3.7k), Kiwi (2.5k), and Swiss (1.1k). The aggregate dollar long fell by a little over a billion dollars in the week gone.

USDINR

Technical Observations:

* USDINR Oct. fut. given Bullish Flag Pattern breakout on Thursday. The pattern target comes around 84 odd levels.

* Momentum oscillators, Relative Strength Index of 14 days floating in an overboughtzone indicates a continuation of bullish momentum.

* Long build-up has been seen with the rise in price and open interest (Reference table on page 7).

* The bias for USDINR Oct. fut.remains bullish with higher side resistance at 83.50 and support at 81.10.

USDINR Oct. Futures Daily Chart

EURINR

Technical Observations:

* EURINR Oct. fut. has given the first sign of trend reversal by forming higher highs on the daily chart. The pair also closed well above mediumterm moving averages.

* Relative Strength Index of 14 days is oscillating above 50 which is considered as positive momentum for the pair.

* Long build-up has been seen with a rise in price and open interest. (Reference table on page 7).

* We remain neutral and wait for a higher low for trend reversal. In the near term, the pair hassupport at 80.06 and resistance at 82.40.

EURINR Oct. Futures Daily Chart

GBPINR

Technical Observations:

* GBPINR Oct. fut. Resisted at 93.21, the 55 days exponential moving average. It also formed a Doji candlestick pattern on Friday considered indecisiveness among traders.

* Momentum oscillator, Relative Strength Index of 14 days placed at 53.3 and flattening indicates neutral to positive momentum.

* The short-term view for the pair remains neutral to bearish. The breakout above 93.25 could bring a relief rally but if it breaks below 91.40 then we may see a new monthly low of 90.30.

GBPINR Oct. Futures Daily Chart

JPYINR

Technical Observations:

* JPYINR Oct. fut. has been forming a higher top and higher bottom on the daily chart. The spread between 21 and 55 DEMA narrowed hinting at a positive crossover in the coming days.

* Relative Strength Index of 14 days placed above the breakeven line of 50 and flattening suggests consolidation.

* The pair is having upward slopping trend line support at 56.10 and resistance at 58.50.

* The short-term traders can initiate long above 57.45 for a target of 58.50 with the stop loss of 56.60.

JPYINR Oct. Futures Daily Chart

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