ICICIdirect.com has expect the US dollar to find buying support on decline against the rupee. Utilise declines in the US$/INR October contract to Sell target of 66.85 - 66.65.
ICICIdirect.com's report on currency
• Government bonds ended little changed, as investors remained on the sidelines in the absence of major triggers, amid expectations that inflation would continue to remain low • The benchmark 6.97% bond maturing in 2026 ended at | 101.60 against the previous close of | 101.54 • The benchmark 6.97% 2026 bond yield was unchanged at 6.75%.
• The rupee lost against the US$ in yesterday’s trade as overnight strength in the US$ on rate hike prospects hurt risk sentiments along with profit booking witnessed in domestic equities . Also, FIIs have been net sellers in October against strong inflows in September • The dollar index ended lower at 97.52, down 0.52%. US empire state manufacturing activity unexpectedly shrank for October. While probability of a December rate hike is high, market expectation is of a gradual pace of rate hike amid mixed employment data still lower than target US inflation data.
US$/INR derivatives strategy: Sell October Contract
• In the currency futures market, the most traded dollar-rupee October contract on the NSE ended at 66.98. The October contract open interest rose 1.56% from the previous day • November contract open interest rose 2.56% from the previous day • We expect the US dollar to meet supply pressure at higher levels. Utilise upsides in the dollar to go short on the US$INR pair.
|US$INR October futures contract (NSE||View: Bearish on US$INR|
|Sell US$INR in the range of 67.05 - 67.15||Market Lot: US$1000|
|Target: 66.85 - 66.65||Stop Loss: 67.25|
|S 1/ S2: 66.80/66.60||R 1/R 2:67.10/67.30|
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