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Rupee to head higher amid inflows

Indian rupee snaps two days losing streak as domestic equities rebounded following foreign inflows. Weakness in dollar index, capital flows and profit booking supported rupee in Wednesday’s trade. However, risk remains following higher crude oil prices and stronger dollar going ahead. Spot USDINR closed at 74.28 with loss of 9 paise or 0.12%. Technically, the pair is having resistance at 74.50 and support at 74. We believe currency may consolidate after sharp surge in last couple of weeks

Data Wednesday showed U.S. manufacturing activity expanded in June at the fastest pace in records dating back to 2007. Factories are grappling with supplier delays, record growth in input costs and hiring difficulties.

Meanwhile, Treasury Secretary Janet Yellen said her department may exhaust emergency measures to avoid breaching the U.S. debt limit as soon as August unless Congress acts to avert a potential default that would be “catastrophic.”

From the data backet, Bank of England interest rate decision, Fed releases the results of stress tests on the largest U.S. banks, U.S. wholesale inventories, initial jobless claims, GDP, durable goods due later today.

Market expectation is for the majority of the BOE’s committee to keep policy unchanged tomorrow, with the transitory-inflation narrative still setting the tone. Pound price action feels the weight of virus concerns as new cases spike to highest since February. Technically, GBPUSD fear greed indicator shows bears set the tone for the first time in nine months. A bearish short term MA crossover is slowly developing and a close above 55 DMA (1.4006) is needed to negate immediate downside risks.

USDINR

USDINR June futures formed inside bar on Wednesday suggesting consolidation. The pair is having support around 74 while facing resistance near 74.50

The short term moving averages are placed above medium term moving averages suggesting upward trend.

The pair is forming higher highs and lows on hourly chart.

Momentum oscillators and indicators remained firm on daily chart suggesting positive bias.

USDINR June futures expected to consolidate in the range of 74 to 74.50.

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