Currency Market Updates: 28 Aug

 

Globally, US FED president, Powell announced that FED will target average inflation of 2%, which necessarily means that FED will allow inflation to overshoot 2% to make-up for lower inflation in earlier period. Thus, interest rate hikes and its quantum would be later and lower.  Ironically, market reaction to FED’s policy change was a bit counter intuitive as US 10 year bond yield surged more than 10 bps to 0.77%. On other hand, Dollar index and US equity were largely flat after the speech.

On domestic front, G-sec bonds are likely trade with bearish bias amid spike in US yields. Interestingly, RBI’s operation twist of INR 20,000 cr remained insignificant in stemming the fall in bond prices. India’s 10 year bond yield is trading near 6.19% can spike toward 6.30% in short term. Yesterday, USDINR pair continued its downward journey as RBI was yet again missing from action. USDINR pair has tumbled to 73.60 levels in early trades. On weekly charts, USDINR pair has significant support near 73.50-55 levels, if broken on weekly basis there is little supports till 72.00

Currency Market Updates: 27-Aug

Globally, US equity markets closed flat after the release of core-durable goods data.Durable and core-durable goods orders increased by 11.2% and 2.4% respectively. US 10 year bond yield eased slightly from key resistance levels of 0.7%. US treasuries will take further cues from speech of FED Chair, Powell, which is scheduled later during the day. EUR/USD pair continued to consolidate near 1.1830 levels.

On domestic front, Government 10 year bond yield re-surged to 6.21% amid concerns of rising inflation and government borrowing. Yesterday, USDINR pair spiked 74.45 in first half and gave up most of its gains in second. USDINR pair has immediate resistance near 74.45-50 levels and immediate support near 74.15-20 levels. Intraday range seen as 74.15-74.45

Currency Market Updates 26 Aug

 

Globally, US equity markets closed in red after the release of disappointing US consumer confidence data. US consumer confidence released at 84.8 against the previous reading of 91.7. US dollar index remained broadly unchanged as it seen consolidating near 93 handle. US dollar index will take further cues from speech of FED Chair, Powell, which is scheduled for Thursday.    

On domestic front, 10 year bond yield eased after RBI’s operation twist announcement of INR 20,000 cr. It is noteworthy that northward journey of yield was initiated by MPC’s meeting minutes. MPC has been clearly uncomfortable with spike in inflation in recent months. Yesterday, USDINR pair gave away its intra-day gains after retesting 74.50. Intra-day range seen as 74.08-74.50.  

Currency Market Updates: 25 Aug

 

Globally, US equity markets rallied more than 1% after the positive news regarding US-China phase 1 trade deal. EUR/USD pair is trading flat near 1.1815 levels amid lack of key economic data from Eurozone and US. USD/JPY pair is trading in tight range between 105.69-106.10 levels.

On domestic front, RBI has announced INR 20,000 Cr bond operation twist; RBI will simultaneously buying long term (2024-2032) securities and selling short term (2020) securities. It seems that RBI is uncomfortable with spike in India’s 10 year bond yield, which had rallied to 6.22%. On currency front, partially convertible rupee witnessed sharp gain on chunky inflow coupled with lack of volume and peculiar absence of RBI. It is noteworthy that USDINR market depth has certainly reduced in covid enforced truncated market environment. Thus accentuating one-off volatile events in rupee markets. Technically, USDINR pair has given a break-down of contracting triangle formation. USDINR pair has immediate resistance at 74.50 levels and immediate support near 74.08-10 levels. Intraday range seen as 74.08-74.50

Currency Market Updates: 24 Aug

 Globally, US dollar seems to recovering after the release of US flash manufacturing and service PMI data at 53.6 and 54.8 respectively. EUR/USD pair slipped below 1.18 handle after the release of weaker service and manufacturing PMI data. Asian equity continued to trade with biddish bias with Hang Seng index is trading nearly 1.5% in green.

On domestic front, equity markets are trading in green with nifty index up nearly 0.6%. India 10 year bond yield spiked above 6% after release of MPC's meeting minutes. It is note-worthy that MPC had kept interest rates unchanged due to spike in inflation. USDINR pair is trading flat near 74.90 levels. USDINR pair might find some support amid recovery in US dollar index. Intra-day range for the pair is seen 74.85-75.05

Currency Market Updates: 21 Aug

 

Globally, risk rally in financial markets took a breather after the release of FED meeting minutes on Wednesday. FED official raised the growth concerns in US economy amid pandemic and need of fiscal stimulus. Consequently, EUR/USD pair tested key support near 1.18 handle before rebounding to 1.1860 level. Overall, risk rally likely to resume with a mild recovery in Dow and Asian indices trading in green. EUR/USD pair will take further cues from Europe and US PMI data, due to release later during the day.

 

On the domestic front, Reserve bank of India’s MPC’s meeting minutes underlined shortcoming of inflation targeting regime in India (owing to over-dependence on food inflation, which is more driven by supply-side). While the economy is reeling under pandemic, RBI might have to take a course correction to stem CPI inflation. It is noteworthy that CPI inflation has surged to 6.93% in Jul primarily on account of food inflation, which surged to 9.6%. USD/INR pair is likely to open near 74.95 levels. Technically, USDINR pair is forming a contracting triangle formation, a break above 75.20 can lead to a substantial rally in the pair. The range for the day is 74.85-75.13.