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Market Round up

* A day after the Indian rupee snapped its two-day losing streak, the forward markets pointed to a potential rebound. The forward markets indicating spot USIDNR could open around 81.50. However, it is still heading for the first weekly decline in four amid bargain buying from traders and hedgers.

* On Thursday, spot USDINR gained 33 paise to 81.63 following a stronger dollar index and weaker domestic equities. The corporate dollar outflows and weak regional currencies also weighed on the rupee. A gauge tracking emergingmarket currencies plunged as much as 1.1% Thursday, recording its worst intraday drop since February as dollar strength and hawkish comments by Federal Reserve officials.

* Outlook: spot USDINR is having resistance at 82.15 and support at 81.25. The near-term view for the pair remains bearish as long as it trades below 82.50.

* Asian stock markets looked poised for a cautious open as Federal Reserve officials warned of more pain to come as they raise interest rates to fight inflation. US Stocks dropped for a second session Thursday, as investors weighed the latest comments from Federal Reserve officials that signalled the central bank is far from a pause in its rate-hiking campaign.

* St. Louis Fed President James Bullard suggested in a speech Thursday that the policymakers should raise the fed funds rate to somewhere between 5% and 7% a range that is higher than the market is pricing. “The change in the monetary policy stance appears to have had only limited effects on observed inflation, but market pricing suggests disinflation is expected in 2023,” Bullard said.

* Bank of Japan’s Governor Haruhiko Kuroda says in parliament that the central bank isn’t unable to raise rates, though the current easing stance remains appropriate now. Not appropriate or desirable to raise rates now, he added.

Technical Observations:

* USDINR Nov fut witnessed an upward swing and covered the last Friday’s loss this week.

* The pair has been forming a bearish pattern of lower tops and lower bottoms on the daily chart.

* It has resistance at 82.35 and support at 80.80, the middle band and lower band of the Bollinger band respectively.

* Momentum oscillator, relative strength index of 14 days period has turned upward but remained below 50 suggesting weak momentum.

* Derivative data suggests short covering on Thursday as the price rose while the open interest and volumes declined.

* We believe the medium-term trend for the pair remains bearish as long as it trades below 82.90 while on the lower side one can aim 81 to 80.50 range.

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