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India’s rupee rallied by the most in almost two months - HDFC Securities 

India’s rupee rallied by the most in almost two months, outperforming Asian peers as oil prices eased. Spot USDINR climbed 0.63% to 74.8750 on Wednesday, the most since Aug. 30. Ease of dollar demand and expectations of foreign fund inflows through QIPs and IIPs supported local unit to recover lost ground as it has been underperforming among regional currencies following surge in crude oil prices. The pair is expected to trade in range of 74.50 to 75 in next couple of days with overall trend remaining up.

A gauge of the dollar’s strength fell to its lowest in almost a month, with the greenback losing ground against all of its Group-of-10 peers, as solid corporate earnings help push the S&P 500 back toward record highs. Bitcoin topped $66,000 for the first time as optimism for cryptocurrencies surged following Tuesday’s launch of the first Bitcoin-related U.S. exchangetraded fund.

Market participants remained confused whether recent down swing in dollar is a pause or done. We expect near term consolidation in the dollar can be seen but broader prospects remain bullish. The fed is edging towards tapering and reduced, global dollar liquidity will be support.

Brent crude oil prices rallied after Saudi’s comment on gas and crude oil output. Saudi Arabia said any extra oil from the OPEC+ cartel would do little to bring down surging natural-gas prices. OPEC+ is powerless to ease the gas crisis, according to the country’s energy minister. Oil consumption may rise by as much as 600,000 barrels a day, he said,

President Joe Biden's advisers are floating new plans, including a tax on billionaires' assets, a minimum tax on corporations and a tax on companies issuing stock buybacks, potentially raising hundreds of billions of dollars.

Technical Observations:

USDINR October futures retraced to downward slopping trend line support around 74.75.

The pair is still trading above short term moving averages with higher top higher bottom formation on daily chart.

The fall in prices were with volume indicating long unwinding and fresh short buildup on Wednesday.

Momentum oscillators and indicators on daily and hourly chart turned bearish.

USDINR October futures expected to open slightly lower but expected to find support in the area of 74.75 to 74.50 while continue to resist around 75.25.

Medium term trend remains up until it holds the level of 74.20 while fresh long buildup can be seen only above 75.80.

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