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 lower on Monday amid caution ahead of a trading holiday as well as strength in the US$. It is likely to open slightly higher today tracking a slump in oil prices while strength in the dollar could cap a sharp appreciation in the rupee • The US$ index ended on a higher note above 99.13 levels as deepening uncertainty over Brexit is weighing on Euro and GBP. Even as UK’s separation date from EU bloc is October 31, the clarity or likeliness of a “Exit deal” is as uncertain as ever. EM currencies remain ranged bound even as the Chinese markets remains closed due to national holidays. A move in CNY post the holiday season is likely to provide cues to EM currencies, including the rupee.
Domestic benchmark 10-year yields ended lower at 6.68% on Monday. The RBI cut the policy rate by 25 bps and affirmed its commitment to remain accommodative to address growth concerns 'as long as necessary’ • The US 10-year benchmark yield fell to 1.53% yesterday. US-China trade worries on top of Brexit uncertainty is weighing on yields.
Currency futures on NSE
The dollar-rupee October contract on the NSE was at 71.18 in the previous session. Open interest declined 0.93% 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 October futures contract (NSE)||View: Bullish on US$INR|
|Buy US$ in the range of 71.02 -71.06||Market Lot: US$1000|
|Target: 71.30 / 71.40||Stop Loss: 70.87|
|S1/ S2: 71.05 / 70.90||R1/R2:71.25 / 71.40|