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.

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