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Rupee Could Trade Lower On Weak Regional Peers

* In dian Rupee is expected to open lower following weakness in the regional currencies, particularly the Chinese Yuan following overnight strength in the dollar index.

* On Wednesday, spot USDINR fell 16 paise to 81.10 following weakness in the dollar index and stronger domestic equities followed by the foreign fund inflows. Technically, spot USDINR is having resistance at 81.60 and support at 80.50. The near-termview for the pair remains bearish aslong as it trades below 82.40.

* India’s trade deficit rose in October after declining in the previous two months, as exports fell sharply due to a slowdown in the world economy. The gap between exports and imports stood at $26.91 billion compared to $25.71 billion in September. Exports fell 16.65% year-on-year to $29.78 billion, as monetary tightening by central banks dented global demand. Imports, however, rose 5.7% to $56.7 billion.

* Dollar gets haven bid, reacting to the rocket blast near the Poland-Ukraine border. But the biggest global indicators will be S&P 500 futures and Treasuries, both of which are showing only modest changesfromNew York closing levels.

* Euro has backed away from the 1.04 handle as traders digest the renewed geopolitical risks after missiles landed in Poland, but the messaging from the optionsspace is clearly euro positive.

* The yuan’s official fixing rates since the US CPI shocks have been a little stronger than market expectations. This suggests that the PBOC has balanced preferences with respect to the local currency as opposed to a desire for gentle weaknessin response to China’s depressed economic state.

Technical Observations:

* USDINR Nov. Fut. Has been hovering at the lower band of the Bollinger band, indicating a continuation of the downward trend.

* The pair formation remains bearish amid lower top lower bottoms on the daily chart.

* It has near-term resistance at 82/47, the middle line of the Bollinger band and 20 DSMA.

* While having support at 80.20, the 200 days EMA.

* Derivative data indicates long unwinding with the fall in price, open interest and muted volumes.

* Looking at the overall price patterns and oscillators, USDINR November fut. Is expected to remain under pressure and a short covering bounce is utilised to make a fresh short sell. The pair is expected to resist at 82.45 and find support around 80.20.

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