USDINR to remain in range with downside bias:Karvy

Karvy Stock Broking has come out with its report on currency. According to the research firm, USDINR pair has witnessed stiff resistance at higher levels and traders are much on selling side. For the day USDINR to remain in the range with downside bias.

On Monday, the rupee ended on flat note of 54.865 against USD on the back of Finance minister statement that fiscal deficit may cool down in this FY 2013-14.  The Asian equities ended on weak note. The similar trend has followed by domestic indices, Sensex fell by 0.21percent to close at 18877.96 and Nifty inched down by 0.37percent to close at 5698.5.  The euro area investor confidence declined more than expected and PPI index has increased. The euro ended on flat note of $1.3026 and the similar trend has followed by European equities.  The US equities ended on higher note on the back of US central bank will continue its monetary easing policy. However, Dollar index moved down by 0.14percent to close at 82.195 against key major currencies.  The bond yield moved down by 0.24percent to close at 7.888 from last settled 7.907 on the back of US spending reduction concern. 

Outlook:
 
This morning both Asian equities and currencies are trading up on the speculation of central banks in the US and Japan will continue their monetary easing policy to stimulate economic growth. Therefore, rupee is likely to taking cues from positive Asian’s during opening. The SGX Nifty future is trading up by 9.00 points. The spread has widened between US and Indian bond yield, it implies rupee may trade strong today. The shared currency euro is trading flat at $1.3029. On the economic front, India will release HSBC-Markit Services PMI which is likely to decline and that may keep pressure on rupee. However, positive data expectation from euro area in the form of PMI numbers and retail trade may extend gains in euro. The US will release ISM Non-Manf. Composite which is expected to decline and that may pressurize USD. Overall, we expect rupee could trade in tight range.

USDINR Spot: On Monday, USDINR remained on subdue note. In the initial hour it hit high of 55.13 and tested the crucial trendline resistance. There after it remained weak and finally settled at 54.85 declining 0.09%. The previous day’s grave stone Doji candle stick formation suggests, pair has witnessed stiff resistance at higher levels and traders are much on selling side. For the day we anticipate USDINR to remain in the range with downside bias.

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