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Rupee Moving No Where…!

Rupee likely to open flat to stronger tracking soft dollar index and crude oil along with dollar inflows by way of IPOs. The dollar index, basket of six currencies trading below 92.50 and crude oil hovering around $74 a barrel. So far this month, overseas investors are net seller of $492 million in equities.

Everything going right for rupee with soft oil, weak dollar and likely flows in near term. Emerging market currencies also trading flat to stronger against dollar. The only hurdle for gain in local unit is central bank interventions.

On Wednesday, spot USDINR erased the previous day’s loss and ended at 74.58 with gain of 9 paise. The pair is going nowhere as at one end the flows are restricting the gains even after stronger dollar and crude oil. Technically, spot USDINR has support at 74 and resistance at 74.80, near term bias for buck remains bearish until it crosses 74.80.

From the data docket, trade balance for June which expected to show widening of the deficit to -$9.4b vs. prior -$6.28b following higher crude oil and other commodities price.

Asian stocks look set for a steady start after Federal Reserve Chairman Jerome Powell signaled more U.S. economic progress is needed before stimulus is pared back Federal Reserve Chair Jerome Powell said the U.S. economic recovery still hasn’t progressed enough to begin scaling back the central bank’s massive monthly asset purchases, while adding that inflation is likely to remain high in coming months before moderating.

China's Industrial Production came in at 8.3% YoY vs expected 7.8%. Retail Sales came in at +12.1% vs expected 10.8% and prior 12.4%. Q2 GDP came in at 1.3% QoQ vs expected +1.2%, prior 0.6%, for YoY at +7.9%.

Technical Observations:

USDINR July futures has been consolidating between 75.10 to 74.30, the 38.2% to 61.8% Fibonacci retracement of 76.40 to 73.

The pair has been sustaining above 55 days exponential moving average.

Momentum oscillator, stochastic turned weak on daily chart indicating further consolidation.

The gap between + DI and –DI also narrowed and about to cross downward indicating short term weakness.

USDINR July futures expected to consolidate in the range of 74.30 to 75.10.

USDINR July Daily Chart

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