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Rupee to consolidate in narrow range ahead of RBI Policy Decision

* Asian currencies are mixed against the US dollar in the morning but could be weighed by concerns of Fed tightening. However, Indian Rupee could open slightly higher following risk-on sentiments and foreign fund inflows. The forward markets indicate spot USDINR could open around 79.10. The pair is likely to consolidate in the range of 79.35 to 79 ahead of the RBI policy decision.

* On Wednesday, spot USDINR gained 45 paise or 0.57% to 79.16, erasing the previous two days’ losses following bargain buying. Dismal trade deficit and weaker service PMI numbers along with dollar demand from importers pushed the pair upwards,snapping fourdays of loss

* Focus remains on Thursday’s Bank of England decision which could raise rates by 25bpsfor the sixth straight time. On Friday’s RBI monetary policy decision.

* India’s services sector momentum hit a four-month low as the seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 59.2 in June to 55.5 in July

* Asian stocks rose Thursday after a US rally triggered by earnings and robust economic data, while bets on further Federal Reserve interest-rate hikes supported shorter maturity Treasury yields. Elsewhere, Oil edged higher after plunging to the lowest close in almost six months as investors weighed a token supply increase from OPEC+ against weaker US gasoline demand and rising inventories

* The dollar index pared its advance on Wednesday, though it held onto gains as traders priced in the possibility of further Federal Reserve hikes after better-thanexpected readings of US economic data. Growth in the US services sector unexpectedly strengthened in July, easing concerns of a broader economic slowdown.

USDINR

Technical Observations:

* USDINR August futures formed bullish candle with open and lows remained at the same price, considered as bullishness.

* The pair sharply recover from trend line support of 78.69 and recoup the past two days losses

 * The short-term moving average breached the medium term moving average flatten at 79.64 level

 * Relative Strength Index of 14 days turned up and currently placed at 46 odd level.

* MACD remained weak and heading towards zero line with negative histogram bars

* USDINR August futures could consolidate around 79 after Wednesday’s rally. The pair is likely to trade in the range of 79.60 to 79.20.

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