ICICI Direct expects US dollar to find supports at lower levels. Utilise downsides in the pair to go long on the US$INR.
ICICI Direct's currency report on USDINR
Government bonds ended lower, as investors booked profit triggered by the US Fed’s stance of ‘gradual’ pace of monetary tightening • The benchmark 6.97% 2026 bond yield rose mildly to 6.84% from 6.83% in the previous day as major central’s bank monetary meetings are done for the month • Yield on the US 10-year further rose to 2.54% from 2.49% in the previous day.
The rupee rose to a near-17-month high against the dollar, as investors’ risk appetite got a boost after the US Federal Reserve expectedly raised interest rates but did not signal a faster pace of tightening for 2017 • The US dollar continue to slide against major currencies post US Fed event. Pound and Euro posted sharp gains against US$. Euro benefited from a setback to anti-Euro parties while the pound rallied post BoE monetary meeting.
US$/INR derivatives strategy
In the currency futures market, the most traded dollar-rupee March contract on the NSE ended at 65.52. The March contract open interest fell 3% from the previous day • April contract open interest rose 12.33% from the previous day • We expect the US dollar to find supports at lower levels. Utilise downsides in the pair to go long on the US$INR pair.
|US$INR March futures contract (NSE)||View: Bullish on US$INR|
|Buy US$INR in the range of 65.50 - 65.60||Market Lot: US$1000|
|Target: 65.75 / 65.85||Stop Loss: 65.40|
|S1/ S2: 65.50 / 65.30||R1/R2:65.80 /65.90|
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