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Currency Daily

Market Roundup

* The Indian rupee is expected to open slightly higher in line with regional currencies. The forward market suggests the spot USDINR opening at 83.25 at domestic bourses. The weaker crude oil prices and risk-asset recovery are likely to support the local rupee in opening trades. However, the foreign fund outflows and political uncertainty may weigh on the rupee, in the near term.

* On Wednesday, spot USDINR gained a paise to 83.28 following foreign fund outflows. The pair has been consolidating between 83 to 83.30 since October. We believe it may remain in the range amid thin volumes ahead of the Festival holidays.

* Bonds in India marked a fifth straight day of gains, supported by a recent rally in Treasuries, bond buying from the FPI and a drop in crude oil prices. India’s 10-year benchmark bond yield declined 1bps to 7.27%, down 9bps in the last five sessions.

* US stocks ended mixed on Wed as near-term overbought conditions weighed. The S&P 500 gained for an eighth day and eked out a 0.1% gain. The Dow Jones slipped 0.1% while the Nasdaq Composite ended marginally higher. The USD ended mixed on Wed as markets await Fed Chair Powell’s speech tonight. USDJPY rose 0.4% to 150.98 after Bank of Japan Governor Kazuo Ueda said underlying inflation remained some distance fromthe 2% target.

* Traders kept a close eye on Federal Reserve speakers to gauge whether policymakers will keep dampening the dovish narrative among investors.

* China slid back into deflation in October, highlighting the country’s struggle with shoring up growth through domestic demand. Consumer prices fell 0.2% last month after hovering near zero in the previous two months, the National Bureau of Statistics said Thursday. Producer prices fell for a 13th straight month, dropping 2.6% versus an estimate for a 2.7% decline

USDINR

Technical Observations:

* USDINR Nov fut. has been oscillating at 21 DEMA.

* The 10 DEMA is placed above 21 DEMA.

* Broadly, the pair has been trading in a narrow range of 83.10 to 83.40.

* Momentum Oscillator, RSI of 14 days period is placed above 50.

* MACD is placed above a zero line but stays below the moving average.

* Minor long buildup has been seen as the price and open interest gained

Short Term Trend: Neutral/ Sideways

Trading Range: 83.10 to 83.40

Recommendation: Sell USDINR Nov. Fut. around 83.30 SL 83.45 Target 83.12

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