IGI Logo

Dollar inches lower after Fed Speakers clarify on inflation

Indian rupee expected to open slightly higher following overnight weakness in dollar index and rebound in risk assets. On Monday, rupee fell 13 paise to 72.97 a dollar level amid bargain buying while the momentum remains on bullish side following inflows and risk on sentiments. Technically, spot USDINR is having support at 72.77 and 72.37 while resistance at 73.35.

Foreign direct investment (FDI) inflows into India rose 9.8% to a record $81.7 billion in FY21 on gross basis as per the Commerce Ministry.

In India, weekly unemployment rate rose for the fourth straight week to the highest since June last year, according to the Centre for Monitoring the Indian Economy. Unemployment rate rose to 14.73% for the week ended May 23 (from 14.4% last week), led by a spike in urban areas even as unemployment in rural areas eased.

Asian risk assets are set up for a buoyant Tuesday after a chorus of Fed speakers overnight once more made it clear the U.S. central bank will look through what they expect to be a transitory inflation spike. Investors accepted the message and preceded to buy some of the dips out there, especially in techs, and equity index futures signal stocks here are set to rise. Elsewhere, Oil jumped by the most in a month after Iran said that gaps remain in negotiations aimed at reaching a deal to end U.S. sanctions on its crude, which would add to supply in the market.

Dollar weakened against all of its Group-Of-10 currency peers after a U.S. economic activity gauge came in below expectations. Open interest in EURUSD contracts touched an all-time high Tuesday with CFTC data showing asset managers adding to near-record longs. Positions have since been reduced with accounts looking to express bullish views through options. GBPUSD open interest has been trimmed since peaking on May 12, with the spot nearly unchanged since. Cable call volumes have been robust in May, according to DTCC data.

USDINR

USDINR May futures trading well below major moving averages.

The pair forming lower highs and lower lows on daily and weekly span.

RSI placed at 33 odd level and heading towards oversold zone suggesting weaker momentum.

Volumes were remain lacklustre in recent downward move suggesting exhaustion of bears.

USDINR May futures expected to trade with bearish bias and selling below 72.80 push towards 72.36 level while 73.30 remains near term hurdle.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer