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Rupee To Wipe Out Previous Week`s Gain - HDFC Securities 

Indian Rupee heads for weekly loss, about to wipe out previous week’s gain following rebound in dollar index, dollar outflows and risk-averse tones. Overseas forward markets indicating USDINR could open 15 paise higher from yesterday’s close. On Wednesday, spot USDINR closed at 73.60 with gains of quarter percentage of 18 paise. Near term technical outlook for the pair turns bullish after closing above 73.50 on higher side we could see level of 73.90 in coming days.

Asian markets may open slightly lower, tracking the weakness on Wall Street overnight. Dow Jones Index logged its third straight red finish after setting a new high last Thursday. Comments from New York Fed President, Williams, suggesting the taper may happen in the coming months could have weighed on sentiment. Meanwhile, investors also digested the less-optimistic Fed Beige book reflecting concerns about growth, inflation and rising wages.

A gauge of the dollar’s strength climbed to a one-week high with appetite for riskier assets shrinking and U.S. stocks extending declines as the spread of Covid curbs mobility around the world.

Chinese equities relieved after CPI came lower than forecast, despite a jump for the PPI. That leaves the door open for another RRR cut in the weeks ahead. China August CPI rose 0.8% Y/Y vs forecast and July +1%.

The ECB has its first chance Thursday to convert its strategy review into concrete action. Bloomberg Economics expects the bank to say it will keep bond buying through the PEPP at a "significantly higher pace" through the end of the year.

USDINR

USDINR September futures retraced 38.2% from the low of 73.10 which is coincidentally 21 days exponential moving average.

The gain in last three days has been well supported buy volume suggesting short covering after vertical sell off.

The pair has gap resistance in the area of 73.80 to 74 range.

Momentum oscillator, RSI of 14 days period exited from oversold zone and currently placed at 43.

Recent surge in USDINR September futures likely to continue in today’s trade with higher side resistance at 74 while it may take support at 72.55.

Short term bias will turn bullish once USDINR September futures sustain above 74.10.

USDINR September Daily Chart

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