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Dollar Bid Well Ahead Of Key US Jobs Data

• The Indian Rupee could open slightly lower taking cues from weaker regional peers but the recovery in risk assets and lower crude oil prices could help limit the loss.

• On Thursday, spot USDINR gained 10 paise to 79.55, underperforming among Asian peers amid exporters’ dollar selling and news of Russia considering adding $70b FX of “friendly nations”. Technically, spot USDINR has been turning weak as it closed below the shortterm moving averages and momentum oscillators are also turning weak. The pair is having support at 79.20 and 78.80 while resistance remains in the area of 79.70 to 79.90.

• The S&P Global India Manufacturing purchasing managers index (PMI) edged lower to 56.2 points in August from an eight-month high of 56.4 points in July, the 14th straight month of growth.

• A gauge of the dollar’s strength climbed to a record high Thursday, as longer-dated Treasury yields advanced and pushed past the previous peaks hit in July. The greenback hovered near two decades high ahead of key US jobs data that could stir expectations for another sharp Federal Reserve interest-rate hike.

• Japanese yen slumped past the 140 per greenback level for the first time since the Aug. 1998 high of around 147. Markets are now waiting on the upcoming US payroll report due Friday. The pound fell to 1.1540, after extending declines for a fifth day, falling more than 1% and hitting below $1.15 for the first time since March 2020. Euro declined to 0.9944 after falling as much as 1.4%, snapping a three-day rising streak 68 basis points of hikes are priced for the European Central Bank’s decision next Thursday, compared to 55bps a week ago

• US manufacturing growth unexpectedly steadied in August, while materials costs declined for a fifth straight month. The ISM factory activity gauge held at 52.8, and the measure of prices paid for materials used in production fell 7.5 points to 52.5. Up next: factory orders probably rose 0.2% in July, slowing from June's 2.0% advance

Technical Observations:

• USDINR September futures closed below short-term moving averages but manages to hold the support of the 55- day exponential moving average.

• Long build-up has been seen with rising in price and open interest.

• The pair is trading in the range of 79.50 to 80.30 since the start of August.

• Momentum oscillator, Relative Strength Index of 14 days period given a negative cross over and currently placed below 50.

• MACD line is flattened above zero line while histogram bar remained small indicating lacklustre with an unclear trend.

• USDINR September futures could trade in the range of 80.30 to 79.50. Looking at the past two candlestick patterns, we believe bears could have an upper hand.

USDINR September Futures Daily Chart

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