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Dollar Falls as Risk Asset Gains

The Indian rupee is expected to open slightly higher following overnight weakness in the dollar index and rebound in the risk assets. The rupee has been consolidating in a narrow range since the last five trading sessions amid the central bank’s intervention in the forward markets. The non-deliverable forward USDINR issuggesting spotUSDINR could open around 82.25.

On Monday, spot USDINR closed at 82.36 up 2 paise. The pair is expected to trade lower towards 82.10 in today’s session. But the overall trend still remains up until it holds the level of 80.70.

Stocks in Asia advanced after the S&P 500 closed above a key technical level and the UK reversed more of its unfunded tax cuts, bolstering global market sentiment.

The dollar declined for a second day as most major currencies clawed back some of their recent losses. The Japanese yen fluctuated Tuesday within reach of the closely watched 150 per dollar level, keeping investors on high alert for possible intervention. Finance Minister Shunichi Suzuki said he would be watching market moves with a sense of urgency.

Pound rose as Chancellor of Exchequer Hunt outlined his tax proposal scrapping proposed tax cuts and spending for energy bills. The euro posted solid gains, rising to an eight-year high versus the yen and about an eight-week high versus the Swissfranc as globalsharesrose.

China’s decision to delay the publication of key economic data including thirdquarter gross domestic product may inject a note of caution to trading in the region.

Technical Observations:

* USDINR October futures formed another Doji Candlestick pattern considered as indecisiveness among traders.

* However, the pair is still holding the support of 13 Days Exponential moving average on the daily chart.

* Momentum oscillator, Relative Strength Index of 14 days period is placed in the overbought zone and flattened indicating a sideways to the bullish trend.

* Derivative data indicated a long build-up on Monday with the rise in price and open interest.

* The pair is having support at 82.08 and resistance at 82.85.

* USDINR Oct. Fut. Is expected to open slightly lower and hold the support of 13 DEMA while 82.60 remains the biggest hurdle to a new high.

USDINR October Futures Daily Chart

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