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Haven Currencies Rose Amid Worry Over Chinese Real Estate Sector - HDFC Securities 

Rupee expected to open flat but likely to gain as we expect rebound in risk- assets. There is scope for minor and temporary risk asset relief on Tuesday as traders prepare for Wednesday’s return of China’s policy-makers. Spot USDINR gained 0.4%, to 73.7425, the biggest jump in two weeks following risk-averse sentiments. The pair is expected to trade in the range of 73.85 to 73.40 ahead of FOMC policy decision.

Haven currencies rose as U.S. equities slid amid worry over China’s real-estate sector, the U.S. debt ceiling and possible Fed tapering.

Indian bonds advanced on expectations they will soon be included in global bond indexes and the government may borrow less than expected in the second half of the financial year. Expectations that India may not borrow as much in the second half of the year are bringing insurers back, buying longer-end papers which would have been the most impacted. The benchmark 10-year yields fell by 3bps to 6.14% on Monday, the lowest since July 8.

September is living up to its reputation as the cruelest month for markets. Monday saw the S&P 500 stumble 1.7%, the VIX spike, while bonds and the dollar rallied. S&P 500 Index fell as much 2.9%, the most since October 2020, before trimming losses. Clearly, markets are worried about the contagion from Evergrande, but there’s a case to be made that markets are overreacting.

A gauge of U.S. builder sentiment ticked higher for the first time in five months in September, rising to 76 from an August reading of 75.

USDINR

USDINR September futures faced resistance at cloud resistance and 38.2% Fibonacci retracement adjoining high of 75.09 and 73.10.

The pair closed below 20 days simple moving average.

It has falling trend line resistance around 74.10.

Higher level selling has been seen with volume support indicating resilience of buyer around 74 level.

Momentum oscillators and indicators heading northward suggesting short term upward momentum.

USDINR September futures expected to show consolidation in the range of 74 to 73.40. Upward breakout can be seen only above 74 while falling below 73.40 will negate the upward momentum.

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