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The Indian rupee is expected to inch up at the open, drawing support from the Reserve Bank of India's likely late aggressive intervention in the previous session. Non-deliverable forwards indicate the rupee will open at around 83.16-83.18 to the U.S. dollar compared with 83.2450 on Thursday. The forward market suggests the spot USDINR to open around 83.21. Spot USDINR little changed at 83.26 on Thursday. Technically, the pair has been trading in a tight range of 83.10 to 83.30 since the start of the month. Indian government bond yields are likely to rise in early session after the 10-year U.S. Treasury yield hit the 5% mark on Thursday for the first time since July 2007. The 10-year benchmark 7.18% 2033 bond yield is expected to be in the 7.38%-7.43% range after ending at 7.3720% in the previous session. The US dollar declined on Thursday, in line with falling short-dated yields, as Federal Reserve Chair Jerome Powell said policymakers are “proceeding carefully” amid uncertainties and risks while leaving the door open to future hikes. Most G-10 currencies advanced, led by European ones. The yield on the benchmark 10-year U.S. Treasury note, a safe haven in times of economic uncertainty that also sets the tone for borrowing costs around the world, hit the 5.0% mark on Thursday for the first since July 20, 2007. Meanwhile, oil retreated as the US dialed back crude sanctions against Venezuela, easing some of the supply pressures caused by the conflict in the Middle East. The U.S. central bank's "Beige Book" indicated that U.S. economic activity was little changed over the last month and a half, as labour market tightness continued to ease and prices continued to increase at a modest pace. In September, US building Permits from the US came in at 1.475M, higher than the 1.450M but still lower than the previous 1.541M.- U.S. Housing Starts rose in September but lower than expected, coming in at 1.358M, lower than the 1.380M but above the last reading of 1.269M.

USDINR

Technical Observations:

USDINR Oct fut. took the support at 21 DEMA.

The pair has been oscillating around 10 DEMA.

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

MACD has been placed above the zero line and the histogram flattened.

Short covering has been seen as the price rises while the open interest declines.

Short Term Trend: Sideways

Expected Trading Range: 83.10 to 83.40

Intraday Recommendation: Buy USDINR Oct. Fut. above 83.40 SL 83.25 Target 83.60.

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