ICICI Direct expects USD to find support at lower levels. Utilise the down side in the pair to go long on the USDINR.
ICICI Direct's currency report on USDINRDebt market
Government bonds plunged for a third session, with the benchmark yield rising to a 16 - month high, as traders sold notes on concerns about a sharp spike in November retail inflation • The GoI benchmark 6.79 % 2027 bond yield gained 9 bps to 7.18 % from 7.09 % in the previous session • Yield on the US 10 - year benchmark bond rose to 2.39 % from 2.38 % as the FOMC monetary policy meeting approaches.Forex (US$/INR)
The rupee rose to a near two - week high against the US$, as domestic equities rose, boosting optimism about foreign fund inflows, while traders remain wary ahead of a crucial state election outcome and a Fed monetary policy meeting • The dollar index ended slightly lower as investors remain on the sidelines ahead of the two - day FOMC monetary policy meeting , which starts today. The US Federal Reserve is widely expected to raise interest rates by 25 bps. However, investors await details on the Fed’s inflation and growth outlook to determine the quantum of rate hikes for 2018. The Japanese Yen could see further declines on a spike in the US$ while the Euro is expected to remain in a range.Strategy In the currency futures market, the near month dollar - rupee December contract on the NSE was at 64.47. The December contract open interest increased 13.12 % from the previous day • January contract US$INR ended at 64.67. Open interest increased 0.47 % in the previous session • We expect the US$ to find support at lower levels. Utilise the down side in the pair to go long on the US$INR.
|US$INR December futures contract (NSE||View: Bullish on US$INR|
|Buy US$INR in the range of 64.42 - 64.48||Market Lot: US$1000|
|Target: 64.75 / 64.85||Stop Loss: 64.30|
|S1/ S2: 64.40 / 64.25||R1/R2:64.70 /64.90|