IGI Logo

Rupee to trade lower ahead of Inflation data - HDFC Securities 

• Indian rupee expected to open slightly lower ahead of retail inflation data which could be above RBI’s threshold amid a surge in food and energy prices. On Wednesday, spot USDINR fell 8 paise to 77.24 on back of a long unwinding and the central bank’s intervention. However, the direction and trend remain up as long as it floats above 76.70 while on higher side 77.55 and 77.70 will act as resistance

• From the economic data front, the eyes will be on India’s retail inflation number and industrial production. The inflation reading could be around 7.4% from the previous 6.95% while industrial output at 1.3% from 1.7%.

• A selloff in stocks may continue in Asia Thursday after elevated US inflation data bolstered the case for aggressive monetary-policy tightening and sparked a slide on Wall Street.

• The dollar weakened against nearly all of its Group-of-10 currencies peers before inflation data but overnight weakness in US equities pushed it higher. The US yield curve appears destined to invert again in the coming weeks after Wednesday’s CPI data confirmed the inflation genie is well and truly out of the bottle. Two-year yields should advance higher with the Fed likely to push rates well above the neutral rate, given both headline and core CPI beats showing the inflation problem is not going away any time soon.

• Fed Fund futures for Dec ‘22 show markets have added 10 bps to the estimated Fed hike schedule this year.

• Oil prices continued to edge higher yesterday, leaving Brent in striking distance of the 2018 highs. The market will keep a close eye on weekly EIA numbers, which will be released later today

USDINR

Technical Observations:

• USDINR May futures took support at 77.30, the 61.8% Fibonacci extension level adjoining low 74.385, high 77.33 and low 75.4575.

• The pair is expected to consolidate in the range of 77.30 to 77.70 after a recent parabolic up move.

• The pair has been trading in a rising channel with resistance around 78.30, and support at 75.50, as shown in the chart.

• Relative Strength Index of 14 days period slightly weaken but the direction remains upward indicating continuation of upward momentum.

• USDINR May futures could trade higher with resistance at 77.70 and support at 77.30. In the near term, bias remains bullish as long as it sustains above 76.70

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