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 mildly lower vs. the US$ on Friday as the Chinese Yuan has tested 7.06 levels against the US$. It is expected to open lower today tracking a further weakening bias in the CNY • The US dollar closed slightly lower yesterday even as overall it remains in a consolidation mode. The dollar witnessed mixed moves. The euro gained over dollar while the British pound further slumped vs. the US$ and is fast approaching low levels since Brexit referendum outcome. The JPY mounted gains vs. the US$ amid safe haven buying. Investors would be tracking CNY as consistent depreciation risks further a rout in EM currencies.
Sovereign bond yields further jumped to 6.50% as outflows from domestic markets and confusion over sovereign bond issue abroad is creating hurdle for further decline. However, a cool-off in global yields is likely to cap a rise in domestic yields • US 10-year yields witnessed a further slide and ended at 1.65% yesterday. Escalation in US-China trade war is likely to see the Fed remain dovish citing increasing risks to growth.
Currency futures on NSE
The dollar-rupee August contract on the NSE was at 70.90 in the previous session. Open interest increased 1.42% 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 71.03 -71.07||Market Lot: US$1000|
|Target: 71.25 / 71.35||Stop Loss: 70.88|
|S1/ S2: 71.0 / 70.85||R1/R2:71.30 / 71.40|