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Rupee Volatility Surges Ahead Of RBI Meeting

* Indian Rupee could start on a positive note following weaker crude oil prices and the dollar index. A gauge of the dollar fell for a second session as traders awaited US payroll data due Friday for clues on the economy and the pace of future Fed hikes. On Thursday, spot USDINR ended at 79.47 with gains of 31 paise, earlier it touched the high of 79.825. The strong demand for dollars from corporates pushed the pair high through the day but in the last hour suspected RBI dollar selling amid high volatility has erased some of the intraday day gains. The set-up for the pair remains bullish as long as it sustains above 78.50 while on the higher side 80 is acting biggest hurdle.

* The focus will remain on today’s RBI monetary policy decision as the market is already pricing in a 50 bps hike. Traders are looking for a future path of the rate as they are expecting a pause aftertoday’s hike.

* Asian currencies are mixed against the American dollar in the Asian session amid conflicting signals ahead of tonight's U.S. nonfarm payrolls report. While gains in U.S. stock futures support risk appetite, slightly higher Treasury yields underpin the appeal of the dollar. An Asian stock index edged up on Friday as investors evaluated the latest batch of earnings.

* A global equity index is set for a third weekly advance in recovery from bear-market lows, helped by corporate earnings. The durability of the bounce remains in doubt because of central bank rate rises and geopolitical threats.

* The US dollar weakened against most of its Group-of-10 currency peers on Thursday as concern returned that aggressive Federal Reserve hikes will hammer economic growth.

* The pound climbed 0.3% to 1.2139 after earlier falling as much as 0.7% to 1.2066. The Bank of England delivered a half-point increase and warned that the recession will begin in the fourth quarter and lastthrough next year.

* Oil heads for a weekly loss on increasing evidence that a global economic slowdown is spurring demand destruction, with prices collapsing to the lowestlevel in six months.

USDINR

Technical Observations:

* USDINR August futures formed Gravestone Doji candlestick pattern considered as a reversal pattern.

* It has retraced 76.8% to 79.98, the swing adjoining high of 80.38 and low 78.69.

* The pair closed below short-term moving average, but having support around 79, the rising trend line support adjoining low 76.38 and 76.93.

* Relative Strength Index of 14 days turned up and currently placed at 48 odd levels.

* Fresh long position has been seen with rising in price, volume and open interest.

* USDINR August futures could consolidate in the range of 79.10 to 79.70.

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