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Rupee : Weaker opening on card as Bond Markets Disappointed by Powell’s comments  - HDFC Securities

* Indian rupee expected to open with dip cut following overnight gain in dollar index and bond yields after Fed’s Chair Powell disappoint bond market. So far this year, federal reserve has lost control of the yield curve and the term structure of interest rates. The yield on the 10 year US Treasury note has surged almost 50 bps since start of the 2021 without comment from Federal Chairman Powell.

* The one month forward is suggesting 30 paise higher opening of USDINR at domestic bourses. The momentum could shift to dollar bulls following rebound in dollar index, higher yields and risk-off sentiments.

* A gauge of the dollar’s strength climbed to a three-month high after Federal Reserve Chair Jerome Powell refrained from pushing back against the recent rise in U.S. yields. Fed chair Jerome Powell’s declarations that “we will be patient,” and “we’re still a long way from our goals” threw a scare into an already jittery rates market, as the 10- and 30-year Treasury yields each rose to fresh one-year highs at 1.55% and 2.31%, respectively. Dollar index, basket of six currencies last quoted at 91.70 from overnight closing of 91.63. Safe haven currency USDJPY reached 108.01, highest since July 1 and last quoted at 107.87.

* Elsewhere, WTI crude jumped above $64 for its best finish since 2019 following a surprise OPEC decision to maintain current production levels, gold sank below $1,700 an ounce for the first time since last spring.

* Federal Reserves balance sheet show a $45 billion sequential decrease in bank credit left interest bearing assets to $7.507 trillion. Despite that weekly downtick, the annualized threemonth growth rate rose to 18.6% from 17.5% on Feb. 27.

Technical Observations:

USDINR March futures fell for the forth day in row and filled the gap.

The pair closed below short term moving averages. It has took support of descending trend line support at 72.81.

Momentum oscillators remain bullish on daily chart.

Directional movement index remains bullish as +DI is placed above –DI while ADX line placed around centre line.

We expect rebound in USDINR March futures in today’s session. The pair has resistance at 73.25 and support at 72.80.

USDINR March Daily Chart

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