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Rupee Heads For Second Weekly Loss - HDFC Securities 

Rupee is expected to open lower at domestic bouses following overnight gains in dollar index and weaker Asian currencies early today. The dollar rose to its highest level in over two weeks as a surprise increase in U.S. retail sales reinforces expectations of Fed tapering. Asian stocks looked set for a steady open as traders weighed risks from China to the global recovery.

India’s rupee erased early gains as the central bank said it intervenes in the FX market to smoothen out the volatility. Spot USDINR steady at 73.5175 after falling as much as 0.2% intraday on back of higher equities and on expectation of dollar inflows from FTSE rebalancing

USDINR expected to trade in tight range as on one end there will be a pressure on account of govt selling stake in Hindustan Copper while couple IPOs and rebalancing related inflows

India 10-year yields up 1bp to 6.17% after falling 4bps on Wednesday. Govt. to sell 260b rupees of bonds Friday, with an option to retain additional subscription up to 60b rupees against the securities.

MSCI emerging markets currency index fell to the lowest level in a week as markets turned risk-averse, with the greenback extending gains after strong retail sales data from the U.S. while jobless claims ticked higher as Hurricane Ida threw a wrench in the labor market’s broad recovery.

US Reserve bank credit rose by $35 billion from a week ago, leaving interest bearing assets on the Fed balance sheet at $8.35 trillion. That’s up 19% year-over-year and 123% from September 2019.

USDINR

USDINR September futures formed Doji candlestick pattern indecisiveness but the longer lower shadow suggesting bulls trying to hold the seat

The pair has been consolidating near short term moving averages while facing resistance at long term moving averages.

The formation still remains bearish following lower highs and lows on daily as well as weekly chart.

Momentum oscillators and indicators on daily chart turned neutral indicating short term consolidation.

USDINR September futures expected to open slightly higher and may move higher in today’s trade with higher side resistance around 73.80 and support at 73.50.

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