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Ruppee To Bid Well On Lower Dollar - HDFC Securities 

Rupee expect to open higher following weakness in dollar index and risk-on sentiments. Today being a first weekly futures USDINR expiry, we expect slightly upward movement in volatility before settlement. A potential gush of foreign inflows on the back of a slew of large share sales is likely to bring reprieve to the Indian rupee, beaten by rising oil prices and dollar outflows. Asian stocks looked set to rise after longer term Treasury yields and the dollar fell as traders kept their eyes on elevated U.S. inflation.

India’s rupee advanced for the first day in four as stocks rallied to new record highs. Bonds advanced after a report late Tuesday showed retail inflation eased. Spot USDINR falls 0.2% to 75.3737 on Wednesday after rising to its highest since July last year on Tuesday.

Technically, spot USDINR is having resistance around 75.80 and support at 75.10. We could see profit booking in near term with medium term bias remaining bullish until it holds 74.60

A gauge of emerging-market currencies broke a three-day decline, helped by a weaker dollar after U.S. inflation came in hotter-than-expected and Federal Reserve meeting minutes that reaffirmed belief in a looming taper.

The dollar held losses against its Group-of-10 peers after minutes from the September FOMC meeting showed officials were broadly in consensus to start tapering asset purchases in mid-November or mid-December. “Fed Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate.”

Technical Observations:

USDINR October futures formed second Doji candlestick near recent high indicating resilience of bulls. High volume with sluggish price actions indicating near term profit booking.

The pair unable to break the previous day low indicating consolidation.

Momentum oscillator, relative strength index of 14 days period exited from overbought zone and could give negative cross over suggesting near term weakness in the pair

USDINR October futures expected to show long unwinding or profit booking in today’s session.

The pair is having support at 75.25 and 75.10 while recent high 75.78 remains hurdle.

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