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Spot USDINR is expected to open higher taking cues from peers -  HDFC Securities 

* Indian rupee in line with other Asian currencies traded lower following surge in dollar and crude oil prices. Dollar’s strength intensified by month-end rebalancing and quarter-end repositioning flows.

* Spot USDINR is expected to open higher taking cues from peers. The non deliverable forward markets indicate, pair could open 10-12 paise higher and expected to add gains following risk averse moods and higher energy prices. On Tuesday, spot USDINR gained 21 paise to 74.05. Technically, the pair is having resistance at 74.10 and crossing of the same will lead to 74.50 level while on downside 73.80 turns support.

* Most Indian bonds gave up gains after the central bank drained cash from the banking system at a sharply higher rate, stoking fears the monetary authority is stepping up its policy normalization. The benchmark 10-year bond yield rose by two basis points to 6.23% on Tuesday after declining to 6.18% earlier. The yield on the 5.63% 2026 bond was at 5.67%, paring the day’s drop to one basis point from seven basis points.

* A global equity selloff looks set to spill into Asia after U.S. stocks saw their worst day since May and bond yields spiked on concerns about inflation. Mounting concern over the debtceiling impasse in Washington added to investor angst. The yield on 30-year Treasuries jumped almost 10 basis points. Brent crude pulled back from a three-year high above $80.

* U.S. dollar rallied against all of its Group-of-10 counterparts, driving a gauge of the currency’s strength to its highest since November. The British pound was the biggest loser, hitting its lowest price against the greenback since January as BOE’s Mann downplays inflation risks.

Technical Observations

* USDINR October futures closed well above short term moving averages and likely to surpass the previous high and 55 Days Exponential Moving Average in coming sessions.

* Momentum oscillator, RSI of 14 days period placed at 57 and above average suggesting positive momentum in the pair

* MACD is also heading towards zero line while histogram already turned positive suggesting bullish trend.

* USDINR October futures has resistance at 74.40 and crossing of the same will open 74.70 and 74.95 while on downside 73.60 remains strong support.

* Medium term trend for the pair turns bullish with buy on decline can give better returns.

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