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Rupee to trade right as Risk is Rolling - HDFC Securities 

Indian rupee started the week on back foot following bargain buying around psychological level of 73 in expectation central bank may intervene to protect that. Spot USDINR ended at 73.11 with gain of 9 paise from previous closed of 73.02. Technical set-up for the pair remains bearish on weekly and daily chart but the oversold scenario on hourly chart suggesting short covering bounce before heading lower. USDINR has resistance around 73.50 and support at 72.90.

The non deliverable forward USDINR last quoted at 73.31 suggesting 4 paise higher opening at domestic bourses.

The emerging-market carry trade is back with a vengeance, and a return of risk appetite together with moderating volatility may bring further upside. Bloomberg’s gauge of carry returns for eight major EM currencies has climbed 2.1% since the beginning of August, more than double the gain in the first seven months of the year.

A gauge of the dollar recovered and the Australian dollar underperformed all its Group-of-10 peers, as elevated virus cases in the nation cast doubts on the central bank’s plan to start tapering stimulus. However, ICE dollar index has been last quoted at 92.14 down 0.14% after Indian market closed at 5pm.

Asian stocks look set to climb, bolstered by a rally in Japan and expectations that central bank support for the reopening from the pandemic will be pared very gradually. Wall Street took Monday off for Labor Day.

Euro expected to trade volatile ahead of ECB meet. ECB’s assessment when it meets this week to consider whether it is time to talk about tapering.

US Dallas Fed President, Steven Kaplan, who has shifted between dovish and hawkish comments of late, is scheduled to speak later today and could provide a new update on the mindset of Fed officials.

USDINR

USDINR September futures formed bullish candlestick pattern after Doji candle suggesting near term reversal.

Momentum oscillator, relative strength index of 14 days period about to exit from oversold zone with positive cross over suggesting short covering bounce in the pair.

The pair has rising trend line support around 73 on weekly chart.

USDINR September futures expected to show short covering bounce in coming days before heading towards 72.70.

Medium to long term outlook for USDINR Sept. futures remain bearish until it closes above 74.20 level while on downside falling below 73 will open 72.70 and 72.30 level in coming days.

USDINR September Daily Chart

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