ICICI Direct expects USDINR to gain supports at lower levels. Utilise downsides in the pair to initiate long positions.
ICICI Direct's currency report on USDINR
The rupee pared all opening gains to end on a weaker note losing almost 13 paise over Tuesday. Concerns in the backdrop of US China trade talks outcome, Brexit uncertainty as well as a mild uptick in oil prices weighed on the rupee • The dollar index rose sharply mounting 97.0 levels ahead of US China trade talks outcome. However, a dovish Fed could cap large gains in the US$. Also, uncertainty around Brexit continues to haunt global risk sentiments. Outcome of the US-China trade talks as well as trend in Euro remain key triggers for the dollar in the near term.
Sovereign treasury yields declined 7.29% as muted global yields and lower inflation have kept yields in a range. Domestic retail inflation fell to 2.05% in January 2019, which could provide further space for RBI to cut rates • US treasury yields rose to 2.70% while worsening global growth expectations could cap sharply rising yields. Incoming economic data remains important for further signals.
Currency futures on NSE
The dollar-rupee February contract on the NSE was at 70.96 in the previous session. February contract open interest increased 9.54% in the previous session • We expect the US$INR to gain supports at lower levels. Utilise downsides in the pair to initiate long positions.
|US$INR February futures contract (NSE)||View: Bullish on US$INR|
|Buy US$ in the range of 70.93 -70.99||Market Lot: US$1000|
|Target: 71.25 / 71.35||Stop Loss: 70.81|
|S1/ S2: 70.80 / 70.7||R1/R2:71.25 /71.35|