ICICI Direct expects USDINR to find support at lower levels. Utilise downsides in the pair to initiate long positions.
ICICI Direct's currency report on USDINR
The rupee ended higher by 6 paise vs. the US$ yesterday tracking a mild recovery in domestic equities as well as consolidation in US$. However, it is expected to open sharply lower today tracking strong gains in the US$ • The US dollar ended with sharp gains with the dollar index rising to almost two and a half year highs. Although the Fed cut the rate by 25 bps as expected, it disappointed investors who were looking for the start of a rate cut cycle. The Fed chairman has kept the doors open for further policy moves, which makes incoming data very crucial. Most currencies are currently trading lower against US$.
Sovereign bond yields further fell to 6.37% as investors continued to price the possibility of sovereign bond issue. Domestic 10-year yields are likely to rise as US yields have hardened post Fed’s policy outcome • US 10-year yields fell slightly to 2.01% in the previous session. The Fed has cut rates as per expectation but reduced the possibility of initiation of a rate cut cycle sighting strength in US economy.
Currency futures on NSE
The dollar-rupee August contract on the NSE was at 68.98 in the previous session. Open interest declined 9.84% in the previous session • We expect the US$INR to find support at lower levels. Utilise downsides in the pair to initiate long positions.
|US$INR August futures contract (NSE)||View: Bullish on US$INR|
|Buy US$ in the range of 69.18 -69.22||Market Lot: US$1000|
|Target: 69.50 / 69.60||Stop Loss: 69.03|
|S1/ S2: 69.18 / 69.00||R1/R2:69.40 / 69.60|