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Dollar consolidates ahead of US job data

Rupee likely to open flat following consolidation in dollar index ahead of the US job reports. On Wednesday, rupee underperformed among Asian currencies amid lingering worries over rising virus cases and slower growth.

Spot USDINR rises 0.1% to 73.9150, the pair erased major intraday gains after RBI Gov. Das’s unscheduled address. Technically, it has support around 73.70 and resistance at 74.30.

Indian sovereign bonds advanced after central bank Governor Shaktikanta Das in an unscheduled address Wednesday announced 350b rupees ($4.7b) of debt purchases on May 20 along with a J raft of other measures to support the pandemic-hit economy. The 10-year yields down 4bps to 5.98%

The dollar hovering near two-week high, consolidating ahead of a key U.S. jobs report that may provide clues on when the Federal Reserve will dial back monetary stimulus. The dollar index,hich measures the U.S. currency against six major peers, was little changed at 91.26 on Thursday, after rising as high as 91.436 in the previous session for the first time since April 19. It ad dipped as low as 90.422 on April 29. The euro traded at the psychologically important $1.20 mark on Thursday, after dipping to $1.1986 on Wednesday for the first time since April 19. 

Sterling was little changed at $1.3910, consolidating around that level over the past two weeks with the Bank of England expected by some forecasters to announce a tapering of its bond buying program at a meeting later Thursday, after vaccinations bolstered Britain's economic recovery.

Three Fed officials spoke on Wednesday, with Chicago Fed President Charles Evans saying that while he was more optimistic about U.S. growth than he was a few months ago, he expects monetary policy to stay super-easy for some time.

USDINR

USDINR May futures drifted lower for nine out of last ten days.

It has been trading well below short term moving average of 20 days.

Momentum oscillator, relative strength index of 14 days period heading down and placed below 50 level indicating weakness.

The pair is having crucial support at 73.85, the 200 days simple moving average and resistance at 74.70.

We expect USDINR May _ futures to consolidated in broad range of 73.80 to 74.70.

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