ICICI Direct expects USDINR to find supports at lower levels. Utilise downsides in the pair to initiate long positins.
ICICI Direct's currency report on USDINR
The rupee weakened vs. the US$ yesterday and ended at 71.43, down by 27 paise, lowest close since the first week of February 2019. It is expected to open further lower tracking losses in Chinese Yuan, which is currently trading at 7.06 • The US dollar closed higher vs. major currencies with the dollar index up over 0.21%. Most major currencies lost against the US$ in yesterday’s session. US equities closed higher amid some uptick in US yields. Chinese Yuan is currently trading at 7.06 levels vs. the US$. It is in the vicinity of recent low made at 7.072. Depreciation in CNY is likely to lead to further is EM currencies including rupee.
Sovereign bond yields rose to 6.59% as market expectation of some kind of stimulus is keeping yield elevated. Yields are likely to remain in a range in the near term • US 10-year yields rose 6 bps to end at 1.61%, amid news that the Treasury may explore issuing ultra long term bonds of beyond 30- year maturity. A sharper cool off in 10-year yields compared to near term treasuries is posing risks of a slowdown in the US economy.
Currency futures on NSE
The dollar-rupee August contract on the NSE was at 71.52 in the previous session. Open interest increased 3.22% in the previous session • We expect the US$INR to find supports at lower levels. Utilise downsides in the pair to initiate long positins.
|US$INR August futures contract (NSE)||View: Bullish on US$INR|
|Buy US$ in the range of 71.43 -71.47||Market Lot: US$1000|
|Target: 71.70 / 71.80||Stop Loss: 71.28|
|S1/ S2: 71.40 / 71.25||R1/R2:71.65 / 71.80|