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Rupee heads for first weekly gain in last six week

* Indian rupee heads for first weekly gain in last weeks as brent crude oil prices decline around 3% this week. The forward market indicating rupee could open slightly higher from yesterday’s level following steady trade in dollar index.

* On Thursday, rupee, in line with other Asian currencies, traded lower for the third successive session following risk-averse sentiments and stronger Dollar after FOMC minutes. US Long duration Treasury yields continued their decline with benchmark 10-year yield falls to 1.25%, symbolic of a market expecting lower inflation, and slower growth, in the future. However, Forex market has not followed this move, with the dollar remaining resilient, as traders focus increasingly on the likely timeline for global monetary policy normalisation.

* Spot USDINR ended at 74.71 with gain of 10 paise. Near term outlook for USDINR remains bullish and level above 74.80 opens for 75 and 75.50 levels while 74.24 becomes the support.

* Asian stocks look poised to fall after the S&P 500 and Nasdaq 100 retreated from records as the focus has shifted back to growth concerns with the Delta variant threatening the global recovery. Emerging-market stocks face more strain as slow vaccination progress amid fresh waves of the pandemic hinders economic recoveries.

* U.S. Treasury yields dropped for an eighth straight day as concerns over the spread of Covid-19 variants gripped markets. The dollar slipped from a three-month high.

* China’s price data saw CPI a touch below expectations at 1.1% y/y, while PPI was dead on consensus at 8.8% y/y. The numbers are too close to forecasts to have an immediate market impact.

* US Reserve Bank Credit, or interest-bearing assets at the Fed, rose to $8.048 trillion, up $8 billion from last week’s reading. That’s up 9.5% year-to-date, 14.7% over the past 52 weeks

Technical Observations:

* USDINR July futures formed bullish candle after Doji candlestick pattern and closed at high of candle indicating bullishness going ahead.

* The pair has been sustaining well above short term and medium term moving averages with higher top higher bottom on daily chart.

* Momentum oscillators and indicators heading higher suggesting continuation of bullish momentum.

* USDINR July futures has resistance at 75.08 and 75.50 while support has been shifted to 74.58.

USDINR July Daily Chart

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