IGI Logo

Market Round-up

* Though the rupee closed at a record weekly low, it has been the best performer among the Asian currencies. The local rupee declined for the second week in a trot but the momentum remained lacklustre as it has been hovering near this level for the last month. The rupee bears are surrendering to the central bank’s dollar supply, retracement in the crude oil prices and a healthy economic performance. However, the foreign fund remained sellers amid risk-averse sentiment globally.

* Last week, spot USDINR gained 4 paise to 83.285 while India’s benchmark 10-year bond yield declined 4bps to 7.31%. The FPI sold worth $614mn equities and bought $246mn debts, in the week gone. The week was marked by weak domestic economic data as eight core infrastructure and PMI activity witnessed slower growth.

* USDINR Outlook: The greenback’s reaction to Friday’s payroll data, it’s clear the bearish are about to take the driving seat in the coming days. The implied currency volatility may further decline in the coming days as the volatility premium in rates is reduced after last week’s three major central bank policy meetings were completed. Spot USDINR is expected to head south towards 83 after resisting crossing the 83.30 in the past month.

* The greenback chocked the worst week since July after Friday’s payrolls report showed a cooling labour market, underpinning views that the Federal Reserve is done raising interest rates. US Treasuries rallied as traders pulled forward expectations of cuts from the Fed. US 10-year yields seeing their first threesession slide since August. The S&P 500 gained over 5%, its best week of the year.

* Positive dollar headlines tend to be sidelined and there is some dispersed evidence that long awaited bearish greenback may be starting to unfold. The hiking cycle seems to be concluding in the US, the UK and Europe. The Federal Open Market Committee skipped a rate hike, and traders interpreted Jerome Powell’s subsequent press conference as dovish. Fed funds futures are now looking for more than 110 bps of cuts by January 2025, compared to 87 bps a week ago.

* Week Ahead: This week may be a little quieter, depending on news from the Middle East. On Wednesday Jerome Powell speaks and again Thursday at the IMF, which may be the key event of the week for US markets. We also have the Fed’s senior loan officers’ survey on Monday, which may show tighter credit. The UK will publish GDP and China may report a third straight month of export decline

USDINR

Technical Observations:

* USDINR oscillating near the 21-day exponential moving average. It has been trading in the range of 83.10 to 83.40.

* Momentum oscillator, RSI has been placed slightly below 50 and flattening indicateslacklustre price action.

* The pair hassupport at 83 and resistance at 83.60.

* The above technical evidence, chart patterns and derivative data exhibiting neutral to bearish.

Sell USDINR Nov Fut at 83.30 SL 83.70 Target 82.90

EURINR

Technical Observations:

* EURINR fut closed above 21 DEMA and is about to cross the recent swing high.

* MACD is placed below the zero line but heading north indicating a possible uptrendgoing ahead.

* Long buildup has been seen as the price and open interest gained.

* The pair hassupport at 88.10 and resistance at 90.40.

Buy EURINR Nov Fut at 89 SL 88.10 Target 90.40

GBPINR

Technical Observations:

* GBPINR Nov fut closed above short-termmoving averages.

* The pair also closed above downward slopping trend line resistance.

* Relative Strength Index of 14 days placed above 50 and given positive divergence. The directional movement index turned positive.

Buy GBPINR Nov Fut at 102 SL 101.00 Target 103.30

JPYINR

Technical Observations:

* JPYINR Nov fut formed bullish candles after a doji candlestick pattern indicating a short-termtrend reversal.

* Relative strength index of 14 days placed slightly below 50 but direction remained upwardwith positive divergence.

* MACD turned bullish and is expected to cross the zero line in the coming days.

Buy JPYINR Nov Fut above 56.10 SL 55.40 Target 57.40

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

SEBI Registration number is INZ000171337