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 sharply higher as favourable domestic news over RBI dividend and FPI tax provided headwinds. It closed with gains of almost 53 paise vs. the US$. The rupee is likely to open slightly lower today tracking further depreciation in the Chinese Yuan • US dollar index ended at 98.0 and continued its broad consolidation. However, CNY is currently trading at 7.162, marking the tenth day of runaway depreciation. Sharp losses in CNY could cap some strength in the rupee. However, any cool-off in US-China trade tensions is likely to see the rupee gaining sharply as domestic measures remain supportive of the rupee.
Sovereign bond yields rose to 6.53% while overall it remains in a range. Domestic yields may see some cool-off tracking the reduced possibility of fiscal slippage • US 10-year yields fell to 1.47% as the US and China trade war concerns linger. A sharper cool-off in 10-year yields compared to near term treasuries is giving rise to the risk of a slowdown in the US economy.
Currency futures on NSE
The dollar-rupee September contract on the NSE was at 71.75 in the previous session. Open interest increased 15.08% in the previous session • We expect the US$INR to find support at lower levels. Utilise downsides in the pair to initiate long positions.
|US$INR September futures contract (NSE)||View: Bullish on US$INR|
|Buy US$ in the range of 71.73 -71.77||Market Lot: US$1000|
|Target: 72.0 / 72.10||Stop Loss: 71.58|
|S1/ S2: 71.75 / 71.55||R1/R2:72.0 / 72.20|