ICICI Direct expects USD to meet support at lower levels. Utilise the down side in the pair to go long on the USDINR.
ICICI Direct's currency report on USDINR
Government bonds fell for a fifth straight session as there was some disappointment on Standard & Poor’s contunuing with its BBB - sovereign rating for India, declining to follow Moody’s rece nt decision to upgrade the country’s rating • The GoI benchmark 6.79 % 2027 bond yield rose to 7.06 % from 7.00 % in the previous session • Yield on the US 10 - Year benchmark bond has remained sticky at 2.3 3 %, as tax reform talks enter into a crucial week.Forex (U S$/INR)
The weakness in the US dollar helped the rupee regain its strength in the past week. The dollar index fell sharply in the past week breaking below the key support in the 94 - 93.85 region. From here on, the rupee action could well be guided by bond yields move • The dollar index, which measures the greenback against a basket of six major rivals, was trading up 0.13 %. Participants focused on congressional testimony from both Federal Reserve Chair nominee Jerome Powell and current Fed Chair Janet Yellen this week. A surge in euro was arrested near 1.20 level, helping the dollar to stabilize.Strategy
In the currency futures market, the near month dollar - rupee November c ntract on the NSE ended at 64. 50. The November contract open interest declined 17.7 % from the previous day • December contract open interest rose 36.6 % in the previous session • We expect the US$ to meet support at lower levels. Utilise the down side in the pair to go long on the US$INR.
|US$INR November futures contract (NSE)||View: Bearish on US$INR|
|Buy US$INR in the range of 64.45 - 64.50||Market Lot: US$1000|
|Target: 64.75 / 64.90||Stop Loss: 64.20|
|S 1/ S 2: 64.40 / 64.20||R 1/R 2:64.90 /65.10|
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