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Rupee To Open Higher On Month End Dollar Inflows

Rupee expected to open slightly higher against stronger dollar following expectation of dollar inflows through MSCI and FTSE rebalancing. Rupee has outperformed so far this month following inflows and weaker dollar index. Expectation of re-opening of economy from June 1 week also could be the trigger for rupee bulls as virus cases showing decline in last couple of days.

On Tuesday, spot USDINR closed at 72.78 with loss of 19 paise, a day before holiday of Buddha Purnima. Today, we could see the pair opening with loss of 14 paise following non deliverable prices of USDINR.

Technically, spot USDINR is having support around 72.30 and resistance at 73.30

There is a modest risk-off tone across Asian assets on Thursday with the dollar slightly firmer and Chinese equities lower. Asian stocks are set for a steady open after gains in U.S. shares tied to the economic reopening from the pandemic. The dollar climbed with Treasury yields.

A key Federal Reserve policy maker said on Wednesday that it will be important for the central bank to begin discussing in coming months plans to reduce its massive bond purchases if the economy continues to power ahead.

All eyes will be on how much further dollar-yuan will extend on the downside and the strength of China’s equity rally.

The U.S. is entering a period of intense competition with China as its government becomes ever more tightly controlled by President Xi Jinping, the White House’s top official for Asia said. “The period that was broadly described as engagement has come to an end,” Kurt Campbell. His remarks came as Joe Biden ordered the U.S. intelligence community to determine where the Covid-19 virus came from, after conflicting assessments of whether its origins are natural or from a lab accident in China.

USDINR

USDINR June futures traded lower and erased most of the gains of previous two months.

RSI placed at 30 odd level and heading towards oversold zone suggesting weaker momentum.

ADX line turned upwards with –DI placed above +DI suggesting continuation of downtrend.

USDINR June futures expected to trade with bearish bias and selling below 72.78 push towards 72.40 level while 73.60 remains near term resistance.

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