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Rupee likely to open flat in line other Asian currencies  -  HDFC Securities

Indian rupee expected to stay calm following other Asian peers. The risk-off sentiment and dollar inflows will make it hard to get day trading opportunities. Along with Zomato IPO’s inflows, we could see inflows from OYO’s as well. Oyo raises $660M via debt issuance to global investors. On Thursday, spot USDINR consolidated in small range and ended the day with loss of 4 paise to 74.55.

Short term consolidation could continue in the pair following strong foreign fund inflows. From the level perspectives, spot USDINR likely to trade in the range of 74.40 to 74.65. India’s foreign trade continued to normalise in June amid a pick-up in imports. Merchandise trade deficit widened to $9.4 billion in June from $6.3 billion in May, according to data released by the Ministry of Commerce and Industry on Thursday. Merchandise exports rose by 0.7% month-on-month to $32.5 billion.

Merchandise imports rose 8.6% to $41.8 billion. On an annual basis, exports rose 48.3% and imports increased 41.9%, led by a low base. India’s central bank will hold Rs.2t, 14-day variable rate reverse repo auction and govt bonds for 320b rupees, with an option to retain additional subscription up to 80b rupees against the securities auction and release foreign-exchange data. Asian stocks look set to follow U.S. shares lower after concerns about the economic growth outlook came to the fore.

Federal Reserve Chair Jerome Powell overnight defended the central bank’s accommodative stance in the face of uncomfortably high inflation. The 10-year Treasury yield slid, set for a third weekly retreat. “If unemployment is at 4.5% by the end of the year and things are progressing the way that I’m expecting, I would guess that some adjustment would be in order --somewhere in that time frame, probably,” Chicago Fed President Charles Evans says.

Crude oil headed for the biggest weekly decline since mid-March, hurt by virus flareups in some parts of the world and amid uncertainty over an OPEC+ deal to boost supply. US Reserve Bank Credit rose by $31.9 billion from a week ago, pushing interest-bearing assets on the Fed balance sheet to $8.08 trillion. That’s up 9.9%, year-to-date, 16% from a year ago.

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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