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Rupee Likely To Open Lower On Risk-off Moods - HDFC Securities 

Indian rupee expected to open slightly higher following overnight weakness in dollar index and stronger Asian currencies. Foreign fund inflows continue in domestic market following risk-on sentiments.

Spot USDINR erases Friday’s loss to close at 72.97 with the gain of 4 paise. Though the bias remains bearish until it breaks the level of 73.50 while on down we could see central bank intervention around 72.75

Indian sovereign bonds extend gains after the central bank announced 200b rupees ($2.7b) of bond purchases to cap a surge in yields. Yield on the most-traded 5.77% 2030 bond fell 4bps to close at 6.09% on Monday after the OMO announcement. Benchmark 10-year yield 3bps lower at 6.04% after rising by 17bps last week.

The dollar weaken broadly against its Group-of-10 peers for a Third session Tuesday as the prospects for a robust federal spending package and signs of the U.S. economy reopening sparked a rally in risk assets. The MSCI Asia Pacific index has resumed the uptrend which stalled last month and that will be the catalyst for the next phase of Asian FX strength

Yet another day in financial markets with many equity markets hitting new all-time highs and the vix completed a remarkable roundtrip towards recent lows. Overall the background for risk assets remains positive even with the recent nominal yield rise as real yields remain depressed. Asian equities expected to trade with positive bias following mother market, as the S&P 500 gains for a sixth consecutive session, its longest winning streak since August on reflation trades

The first committee votes on elements of President Joe Biden’s $1.9 trillion Covid-19 relief package begin on Tuesday, House schedules showed.

USDINR

USDINR February futures faced resistance at 55 EMA on hourly chart

The trend remains bearish following sequence of lower peak and trough on major time scale.

Momentum oscillators on daily and hourly time frames remain weak suggesting continuation of downward momentum.

In near term, USDINR February futures has support at 72.90 and resistance at 73.20 followed by 73.42.

We remain bearish and intraday bounce will be used to make fresh short by keeping stop above 73.20.

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