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Currency Movements

Haven Coming Home As Risk Sentiments Improves

• The Indian Rupee could open flat but heads for the second weekly gains following recovery in risk assets and foreign fund inflows. Overnight, the dollar falls in a corrective move into the weekend ahead of US inflation data next week.

• On Thursday, spot USDINR fell 19 paise or 0.23%, the biggest one-day fall of the September month, amid risk-on moods supported by foreign fund inflows. Technically, the pair is still in the broad range of 79 to 80 and directional movement can only be seen only after breakout or breakdown. For today, spot USDINR is likely to trade in the range of 79.50 to 79.80 with a negative bias.

• A gauge of the dollar’s strength fell as improving risk sentiment and a hawkish European Central Bank curbed demand for the world’s preeminent haven asset. The ECB raised interest rates by 75 basis points on Thursday and left the door open to another jumbo rate hike in October, bolstering investor sentiment toward the euro against the greenback.

• Stocks in Asia look set for a subdued start, hampered by hardening expectations of another large Federal Reserve interest-rate hike.

• Federal Reserve Chair Jerome Powellsaid officials won’t flinch in the battle to curb inflation, hardening expectations that they’ll deliver a third straight jumbo rate hike later this month. They next meet on Sept. 20-21 and Powell has kept the option open for another 75 basis-point moves, following increases of that size in June and July.

Technical Observations:

• USDINR September futures hovering around 13 and 21-day exponential moving averages.

• The pair is having strong support at 55 days exponential moving average currently placed at 79.69.

• Momentum oscillator on daily chart turned weak with negative cross over and declining.

• MACD line flattens above zero line with histogram bars remaining tiny.

• DMI indicating weakness in the direction as –Di is placed above +DI while ADX line turning up.

• Long unwinding has been seen with a fall in price and open interest.

• USDINR September futures could trade in the range f 79.70 to 80 with a negative bias.

USDINR September Futures Daily Chart

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