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All Eyes on Jackson Hole

• The Indian Rupee could open flat but could consolidate in a narrow range as on one hand the risk-on sentiments and foreign funds inflows could support the rupee while on the other hand stronger dollar index and higher crude oil prices limit the lower side. Today, being a monthly expiry there could be some monthend dollar demand could come but the direction might be unclear ahead of the annual Jackson Hole symposium.

• On Thursday, spot USDINR gained 7 paise to 79.88. So far this week we haven’t seen any big price action even after the surge in the dollar index and global forex market volatility. Technically, the pair has been in the range of 79.70 to 80 and the breakout of the range will give the directional trend. By that time, directional tradersshould avoid trading.

• The dollar declined against most of its Group-of-10 peers as positive US economic data and China’sstimulus plan boosted demand for risk-sensitive assets.

• Fed officials gathering for an annual conference in Jackson Hole, Wyoming, have already conveyed a chorus of hawkish comments. Powell is expected to restate the resolve to keep hiking interest rates to fight inflation when he speaks at 7:30 pm IST Friday.

• The bond market remains divided on whether the Fed will hike by 50 basis points or 75 basis pointsin September.

• Applications for US unemployment insurance fell for the second week, suggesting that employers are holding on to workers despite growing economic uncertainty; also, upwardQ2 GDP revisionsshowed strong corporate profits gained.

Technical Observations:

• USDINR September futures formed gravestone Doji candle slightly above 13 and 21 days exponential moving average, indicating lacklustre price action.

• The pair is having strong support in the area of 79.90 to 79.70 while on the higher side it is facing resistance around 80.40.

• Momentum oscillator, relative strength index of 14 days has been flattened above 50 indicating lower or sideways momentum.

• MACD and MACD histogram also remained calm and steady suggesting a lack of direction trend.

• USDINR September futures could trade in the range of 80.40 to 79.70 ahead of monthly expiry.

USDINR September Futures Daily Chart

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