ICICI Direct expects US$INR to meet supply pressure at higher levels. Utilise the upsides in the pair to initiate short positions.
ICICI Direct's currency report on USDINR
The rupee ended mildly weaker yesterday even as RBI cut policy rate by 25 bps as expected, disappointing participants who were expecting more. The rupee is expected to open at same levels while a move in equities, dollar is likely to trigger direction • The Dollar Index ended lower yesterday even as expectations of an interest rate cut are weighing on yields and monetary divergence. ECB emitted mixed signals, disappointing the Euro doves who were expecting further easing measures. Chinese Yuan remains below 6.91 levels, which is mildly positive for EM currencies.
Sovereign benchmark treasury yields fell sharply to 6.93% as RBI cut interest rates as well as changed stance to “accommodative” from “neutral”. Lower oil prices and declining yield are supporting domestic debt • US treasury yields settled slightly lower at 2.12% and witnessed a sharp slump in May. Investors are pricing in a higher probability of a rate cut in July 2019 policy meeting.
Currency futures on NSE
The dollar-rupee June contract on the NSE was at 69.41 in the previous session. June contract open interest declined 1.50% in the previous session • We expect the US$INR to meet supply pressure at higher levels. Utilise the upsides in the pair to initiate short positions.
|US$INR June futures contract (NSE)||View: Bearish on US$INR|
|Sell US$ in the range of 69.50 -69.56||Market Lot: US$1000|
|Target: 69.25 / 69.15||Stop Loss: 69.71|
|S1/ S2: 69.35 / 69.20||R1/R2:69.55 / 69.70|
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