IGI Logo

Rupee edges up on dollar inflows -  HDFC Securities

In the week gone, rupee consolidated in a narrow range and has muted reaction to economic data of trade balance, inflation and output growth. Economic data remained on weaker side as expected but market players are optimistic about future and pricing in the better days ahead as economic activities started rebounding with ease in restrictions. Forex market participants have given more importance to the inflows of IPOs and lower crude oil prices than a stronger dollar index.

Rupee marked the second weekly gains to end at 74.56, up 8 paise a dollar. So far this month, rupee band and momentum remained narrow after witnessing sharp sell-off in June. Medium term bias for USDINR remains on bullish side but short term consolidation could continue for few more days following foreign fund inflows and lower crude oil prices.

India’s forex kitty up for the third week in row to $611.895b up by $1.883b for the week ended July 9, RBI data showed.

The S&P 500 fell 1% this week, snapping a three-week winning streak thanks to a retreat by big tech. While domestic equities gained one and half percentage points as virus cases declined and economic activities back to normal.

Dollar has gained in the week gone following short covering and risk-off sentiments. As per CFTC, FX position liquidation was the order of the day. Longs were cut in the euro (17.5k), sterling (13.9k), CHF (3k), and CAD (14.8k), while shorts in the yen were trimmed (12.9k). The aggregate dollar short fell by $3.8 billion, and now stands at just $1.8 billion, its smallest since March 20.

OPEC and its allies struck a deal to inject more oil into the recovering global economy. The deal, agreed at a hastily convened Sunday meeting ahead of a long Islamic holiday, allows for monthly supply hikes of 400,000 barrels a day, and puts OPEC+ back in control of the market after two volatile weeks.

This week may offer a better gauge of where things stand as earnings season puts share prices to the test. Economic data will also shed some light on recovery momentum, with the focus largely on Europe where members of the ECB are said to disagree on stimulus guidance.

Technical Observations:

USDINR

* USDINR July futures holding the support 13 days exponential moving average.

* The pair has been in uptrend amid higher top higher bottom formation on daily chart and hourly chart.

* Momentum oscillator, Relative Strength Index (RSI) of 14 days period holding well above 50 and direction is towards north indicating continuation of upward momentum.

* The pair has been consolidating in between 61.8% and 76.4% of previous down trend from 75.50 to 72.60

* USDINR July futures expected to trade in range of 75.10 to 74.50 before heading towards Yearly high of 75.50

EURINR

* EURINR July futures has been resisting at downward slopping trend line adjoining high of 90.82 and 89.86.

* It has been placed well below short term moving averages with lower top lower bottom formation on hourly and daily time frames.

* Momentum oscillator, RSI of 14 days period heading southward and placed below 50 suggesting continuation of downward momentum.

* The pair is having multiple bottom, 50% Fibonacci retracement and psychological support at 88 level. Breaking of the same will lead to escalation of down fall and on for 87.40 and 86.60 level.

* We remain bearish in EURINR July futures and advice selling below 88 for target of 87.40 and 86.60 keeping stop loss above 88.60.

GBPINR

* GBPINR July futures has been trading falling channel since May with resistance around 103.70 and support around 102.30

* The price has been swinging around short term moving averages indicating continuation of range bound trade.

* Momentum oscillators and indicators along with averages not giving clear directional trend for GBPINR. However, the weakness of GBP against USD suggesting underperformance for GBPINR.

* GBPINR July futures expected to trade with negative bias once the level of 102.30 breaks and the bearish view will negate if it starts trading above 103.70.

JPYINR

* JPYINR July futures extended 100% of previous up swing. The pair is having strong resistance around 68.35

* The pair has been trading above short term moving averages and it has been placed above medium term period averages suggesting continuation of positive trend.

* Momentum oscillator, relative strength index of 14 days placed at 57 odd level and heading north indicating continuation of upward trend.

* Looking at the above technical indicators, the JPYINR July futures likely to trade with positive bias with higher side resistance at 68.35 and support at 67.50

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer