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Market Roundup

Market Roundup The Indian rupee is expected to open slightly higher after an overnight fall in the dollar index and US treasury yields.

The forward market indicates USDINR could open around 81.95 at local bourses. On Wednesday, spot USDINR fell 5 paise to 82 after witnessing a sharp surge in the previous two days.

Technically, the pair is still in a downtrend following the bearish price formation of lower tops and bottoms on the daily chart. The bias remains bearish as long as it trades below 82.30 while on the downside we don’t see below 81.60.

A gauge of the dollar declined as US inflation data emboldened traders to bet the Federal Reserve may look to pause its aggressive interest rate hikes. Monetary-policy-sensitive 2-year Treasury yield slumped 11 basis points on Wednesday before trading little changed at 3.92% in Asia.

President Joe Biden and congressional Republicans have made little tangible progress toward averting a first-ever US default on Wednesday.

President Joe Biden said a US default would drag the country into a recession and have devastating repercussions across the global economy as he sought to ramp up pressure on Republicans to strike a deal to raise the US debt limit.

China's consumer inflation cooled more than expected in April while producer prices fell deeper into deflation. CPI growth slowed to 0.1% year on year, the weakest pace in two years, from 0.7% in March. The PPI dropped 3.6% after a 2.5% decline a month earlier.

The slowdown could enable the PBOC to ease and may reduce price pressures abroad. The US budget surplus for April dropped 43% year on year to $176.2 billion. For the first seven months of the fiscal year, the deficit hit $924.5 billion, more than double the same period in 2022.

Oil rose after settling lower for the first time this week. Earlier, official data showed US crude inventories rose by 2.95 million barrels last week.

The double-digit inflation is set to force the Bank of England into a 12th straight interest rate rise later today even though the end of its lightning-quick hiking cycle is coming into view.

Technical Observations:

USDINR May fut. formed a small body candle which indicates consolidation after a sharp surge.

The pair has been closed slightly above the 21 DEMA. It has downward slopping trend line resistance at 82.30 and support at 81.60, the horizontal trend line.

Momentum Oscillator, RSI of 14 days period is oscillating slightly above 50. MACD has been placed below a zero line but the direction turned upward in the last two days.

Long unwinding has been seen as price, volumes and open interests declined. We remain bearish in USDINR May future with downside support at 81.50, keeping stop loss above 82.50.

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