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Rupeen likely to open lower as dollar gains

Indian rupee to open expected to  slightly left following rebound in dollar index. The forex markets were closed on Thursday on account of “Eid”. The greenback has gained following higher than expected inflation reading which market took as sign of taper tandem. A gauge of the dollar’s strength heads for its biggest weekly gain in over a month as traders await a report on retail sales which may add to evidence of a U.S. recovery.

On Wednesday, spot USDINR gained 9 paise or 0.12% to 73.43. Technical set up remains bearish as pair trades below major moving averages with lower top lower bottom formation. In near term, the pair has support at 73.20 followed by 73.05 while resistance has been shifted to 73.70 odd level. 

Indian inflation eased to a three-month low in April as food costs rose more slowly. Annual retail inflation rose 4.29%, down from 5.52% in March and near the 4.20% forecast .

The IIP grew by 22.35% from a year earlier, fastest industrial output growth in the current series of the IIP, with 2011-12 as the base year. That was mainly on back of base effect as last year March it contracted by 18.67% amid nation wide lockdown. The base effect will continue to impact economic 14696. 14850. . data in the months to come.

Stocks in Asia look set to rally after U.S. benchmarks halted a three-day slide, with investors migrating to value from growth companies as signs of a strengthening labor market tempered inflation worries. Treasuries rallied from the prior session’s weakness sparked by stronger-than expected consumer price inflation data.

President Joe Biden said he’s willing to compromise on his $2 trillion infrastructure proposal as he sat down Thursday with half a dozen Republican senators who’ve said they might support the legislation.

US Federal Reserve balance sheet up by $32 billion weekly pushed interest bearing assets at the Fed to $7.78 trillion, up 22.8% on an annualized three-month basis and 89% from mid-March of last year.

USDINR

USDINR May futures formed gravestone doji candlestick pattern indicating continuation of down trend.

The pair is facing resistance at 50 days simple moving average.

Momentum oscillator, relative strength index of 14 days period slightly turned up but the price action remains weak.

MACD also breached the zero line and heading south suggesting weaker trend.

The pair is expected to consolidate in the range of 73.80 to 73.40 range with negative bias.

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