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Indian rupee expected to open lower following overnight rally in crude oil prices - HDFC Securities 

* Indian rupee expected to open lower following overnight rally in crude oil prices while record high equities could attract foreign inflows which will help local currency to trim losses. Asian stocks rose Friday after U.S. shares rallied and sovereign bond yields surged on economic optimism and easing fears of contagion from China Evergrande Group’s debt crisis.

* Spot USDINR, on Thursday, closed at 73.64 with loss of 23 paise or 0.3%. The pair has been in near term consolidation with resistance around 74 and support around 73.40.

* The greenback and yen fell amid equity gains as Evergrande worries eased, while global bond yields jumped as central banks noted the potential for inflation as the global economy rebounds. The greenback fell against all of its G-10 peers except the yen; oil-linked currencies were among the top performers amid WTI rally

.* GBPUSD climbed as much as 1% to 1.3751 as gilt yields rose after the Bank of England’s rate decision. The Bank of England opened the door to a 2021 rate increase, pushing down 10- year gilts.

* The prospect of tighter monetary policy spurred a global selloff in bonds. Long-term Treasury yields surged the most in 18 months as traders brought forward their expectations for the first Fed rate hike to the end of 2022. US 10-year yield jumped 11 bp to 1.41%.

* U.S. data showed an unexpected rise in continuing jobless claims, with Markit PMI easing slightly in September. Fed Chair Jerome Powell, Fed Governor Michelle Bowman and Vice Chairman Richard Clarida discuss pandemic recovery, later today.

Technical Observations

* USDINR September futures resisted at 55 days exponential moving average since last two days which is currently placed at 73.95.

* Momentum oscillator, relative strength index hovering below 50, however the direction is upward.

* The pair is consolidating in between 73.60 to 73.97, the 23.6% and 38.2% Fibonacci extension range

* The pair has given trend line breakout on hourly chart but biggest hurdle remains around 74.75.

* USDINR September futures expected to trade in range of 73.40 to 73.97. We may see down swing if higher 74 levels do not break while level below 73.40 drag pair towards 73.10.

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