IGI Logo

Rupee may appreciate on weaker dollar   -  HDFC Securities

India’s rupee may open higher on potential higher foreign inflows and a weaker dollar while bonds may come under pressure amid higher crude oil prices. Implied opening from forwards suggest spot may start trading around 74.35.

Spot USDINR little changed at 74.4187 on Monday following inflows and weaker closing of domestic equities.10 year bond yields on 6.1% 2031 bond up 1bp at 6.17%. spot USDINR is expected to consolidate along other Asian currencies ahead of month end adjustments. The pair expected to trade in the range of 74.20 to 74.70 range with negative bias amid rebound in risk sentiments and weaker dollar index.

On global front, dollar fell by the most in almost two weeks as U.S. stocks hovered near record highs and appetite for riskier assets picked up. Greenback pressured earlier as the real yield on U.S. 10-year debt fell to a record low. Higher in inflation expectations pushed U.S. 10-year real yields to a record low of -1.123%. The euro advanced along with resource-linked currencies as an index of commodities touched a six-year high.

The S&P 500 rose another 25 basis points, logging its fifth straight green finish following last Monday’s selloff. The U.S. and China left open the possibility of a summit between their presidents despite a contentious day of talks between officials from both sides in Tianjin.

U.S. new home sales fell 6.6% in June to an annual rate of 676,000, the lowest since the first month of the COVID-19 pandemic in early 2020, as high prices and a limited selection appeared to frustrate would-be buyers. Near term focus will be on FOMC outcomes. Looking from Monday’s price action, U.S. traders are positioning for a dovish Fed this week.

Equities rose, the dollar fell and the yield curve steepened. Real yields dropped to a record, while breakeven rose, suggesting investors expect a dialing back of the relatively hawkish message from the last FOMC.

USDINR

Technical Observations:

* USDINR July futures has been stuck in range with low volume and volatility since last three days as we can see from the chart there were three Doji candlestick indicating indecisiveness ahead of month end expiry.

* The pair closed below short term moving averages and could give negative cross over indicating weakness.

* Momentum oscillators are placed around breakeven level with down swing indicating weaker momentum.

* USDINR July futures is having support around 74.10 and resistance at 74.70. The bias for the day remains slightly on left side today.

USDINR July Daily Chart

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