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Rupee Heads For Fourth Weekly Gains - HDFC Securities

Indian Rupee heads for the fourth weekly gains following strong foreign fund inflows in primary markets and weaker dollar index. Local unit is expected to start where it left yesterday ahead of the fiscal deficit and June eight core infra data later in the evening. Overseas forex market remained calm after FOMC’s dovish comments. Overseas forward market indicates spot USDINR to open around 74.28 and could continue to consolidate in the range of 74.20 to 74.40 range.

On Thursday, spot USDINR ended at 74.28 with loss of 9 paise while yield on 6.1% 2031 bond rose 1bp to 6.20% and 5.63% 2026 bond yield rose 2bps to 5.72%. The domestic data bucket, we have fiscal deficit and June eight core infra numbers which are likely to be better than previous month as lockdown and restriction related to virus were eased during June month. Asian stocks look set for a muted start as traders weigh mega-cap tech earnings and risks from China’s crackdown on private industries. U.S. shares edged up while Treasuries fell.

Elsewhere, Oil futures finished at their highest level in more than two weeks, with the U.S. benchmark rising 1.3%, while December gold futures jumped 1.7% to the highest close since June 16. A gauge of the dollar dropped to the lowest level in three weeks, with traders exiting long positions as economic data released Thursday added to speculation the Federal Reserve is unlikely to slow its accommodative policies anytime soon.

Former New York Fed President William Dudley comments that the central bank probably may not announce tapering until November or December also weighed on the greenback U.S. gross domestic product grew at an annualized pace of 6.5% in the second quarter, falling short of the average forecast of 8.5%. US Reserve Bank Credit, or interest bearing assets on the Fed balance sheet, rose to a fresh high of $8.199 trillion, up $25 billion from a week ago. That represents 17.7% year-over-year growth and a doubling from the March 2020.

USDINR

USDINR August futures consolidated in small after lower opening.

The pair expected to remain under-pressure, as prior swing was on down side.

The pair has been trading well below short term moving averages on hourly and daily chart.

Momentum oscillators entered in oversold zone but the trend remains weak in absence of price support.

USDINR August futures expected to trade with negative bias and trade below 74.45 could open for 74.20 while 74.65 becomes the resistance for today.

USDINR August Hourly Chart

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