Currency Market Updates 11-Sep

Globally, much-anticipated ECB monetary policy turned out to be a low key event as ECB decides to keep monetary policy framework broadly unchanged. ECB President, Lagarde maintained the ultra-easy policy along with bond-buying programmes are showing intended results in the Euro area. More importantly, for currency traders, Lagarde felt that “Clearly to the extent that the appreciation of the euro exercises negative pressure on prices, we have to monitor carefully such a matter”. To be fair, the tone of comments were quite soft, thus signalling that ECB is broadly comfortable with the recent rally in EUR/USD pair. Post ECB meeting, EUR/USD pair spiked to 1.19 handle but could not sustains its gains due to rising concerns of hard Brexit and sell-off in US equity markets. Dow Jones resumed its downward journey as it tumbled nearly 1.5%. Technically, the EUR/USD pair has multiple resistances (falling trendline on the monthly chart from 2008) at 1.1990-1.2030 zone.  Any meaningful rally is only plausible after a monthly close above 1.12040 levels.

 

On the domestic front, Yesterday, Equity markets rebounded nearly 1.5% after the rumour of Amazon investing nearly $20 bn in Reliance retail, leading to nearly 7% rally in reliance industries. The same news leads to sharp volatility in currency markets, as USDINR momentarily fell to 73.15 before retracing back to 73.43 levels. It is noteworthy that Reliance has declined to either confirm or deny any such developments. Technically, USDINR pair has failed to close above 73.62-65 levels, which is 38.2% retracement of the move from 75.05 to 72.75. Thus 73.62-65 levels remains a key resistance for the pair and near term support 73.22-25 levels

Currency Market Updates: 10 Sep

Globally, EUR/USD rebounded above 1.18 handle after leak reports of improved sentiments in ECB’s economic survey. EUR/USD pair will take further cues from ECB monetary policy meeting, scheduled later during the day. It is noteworthy that ECB is likely to announce changes in monetary policy settings, though they might way different than FED’s average inflation targeting. Last month, FED has announced average inflation targeting, which should allow FED to keep interest rates lower for a longer period. On the equity front, Selling pressure in US equity markets paused as Dow recovered nearly 1.5% after losing more than 5% in the last three trading sessions.

On the domestic front, 10-year bond yields are likely to hover around 6% handle amid a drop in crude prices and concerns of higher borrowing in the near term. Equities are likely to rebound tracking its global peers. On the currency front, USDINR pair is likely to open lower near 73.45 levels amid weakness in the US dollar. US dollar has retreat against emerging currencies lending support to likely rupee gains. Technically, USDINR pair has failed to close above 73.62-65 levels, which is 38.2% retracement of the move from 75.05 to 72.75. Thus 73.62-65 levels remains a key resistance for the pair and near term support 73.22-25 levels. For intraday prefer to sell near 73.45 with stop 73.55 for a target of 73.28

Currency Market Updates: 2-Sep

Globally, ECB’s member Lane commented that EUR/USD levels do impact monetary policy of Euro-zone. This lead to sharp retracement in Euro to 1.19 handle from key resistance (on monthly chart) of 1.2011 levels. US’s ISM manufacturing PMI released at 56 levels against previous reading of 54.6.

On domestic front, 10 year bond yield is trading close to key support near 5.92-95% levels. RBI has clarified that additional HTM category bonds are only for fresh G-sec issuance i.e. RBI is keen to manage government borrowing plan without disrupting the market. USDINR could held to its overnight gains and now trading below 73 handle. USDINR remains a sell on uptick candidate with resistance at 73.25 levels and support at 72.75 levels.