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Rupee likely to open flat in line with Asian currencies

* Indian rupee expected to start steady in line with other Asian currencies after US markets open today after Monday’s holiday on account of Martin L King’s day. The forward market indicating USDINR could open with a paise lower from previous closed at domestic bourses. The focus will remain on Risks from elevated inflation and a global advance in sovereign bond yields are continuing to shape sentiment. Crude could be the another problem for countries like India which depend on import for energy requirement as Brent crude is trading near the highest level since 2014.

* Weaker economic data, higher bond yields, surge in crude oil prices and state-run banks dollar buying on behalf of importers weighed on rupee for the second day in trot. Spot USDINR started the week on front foot with gaining 9 paise to 74.24. Technical pull back continued in USDINR after tumbling around 3% in past one month. As a part of retracement pair could retrace towards 74.50, the 100 days simple moving average while recent swing low of 73.78 remains support.

* Asian stocks are set for a cautious start as traders weigh the economic recovery from the pandemic and await possible catalysts from the corporate earnings season. A dollar gauge is quoting around 95.14 almost unchanged from previous day.

* BoJ has maintained status quo in today’s meeting at -0.1 and said inflation expectations have risen moderately from 0.9% to 1.1% . They changes price-risk balance view for first time since 2014. After BoJ policy announcement, Japanese equities markets gained.

* Chinese President Xi Jinping called on nations to secure global supply chains and prevent inflation shocks, as he seeks a smooth path to clinching a precedent-defying third term in power. He also warned about global inflation pressures and the resulting effects of higher interest rates.

USDINR

Technical Observations:

* USDINR January futures gained for second day in tow and closed above leading span A of Ichimoku, considered as first sign of strength.

* The pair has been trading below 21 Days exponential moving average with lower top lower bottom indicating near term trend is still down.

* Momentum oscillator, Relative strength Index of 14 days period exited from oversold zone and currently placed at 39 indicating short term upward momentum.

* There were rise in open interest and price on Monday indicating fresh long build-up, however the volume remains lower.

* USDINR January futures expected is having resistance at 74.61 and support at 73.80.

USDINR January Daily Chart

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