ICICI Direct expects USDINR to meet supply pressure at higher levels. Utilise upsides in the pair to initiate short positions.
ICICI Direct's currency report on USDINR
The rupee extended gains as the currency was buoyed by the RBI repo rate cut as well shift to “neutral stance”. Stability in currency would help contain outflows from debt markets. The rupee is expected to open further higher today while moves in major currencies during the European session would provide cues • The dollar extended gains on Wednesday benefitting from other major central banks going on the back foot from their tightening outlook. BoE raised concerns on Brexit uncertainty, which has weighed on US growth. BoE lowered its growth forecast for the UK economy along with EU growth concerns, which have weighed in the Euro and supported GBP.
Sovereign treasury yields declined to 7.32% as the RBI cut the repo rate to 6.25% and changed its stance on the monetary policy to “neutral” from “calibrated tightening”. Declining yields and strength in the rupee would help recover flows • US treasury yields extended their decline to 2.66%, amid worsening global growth expectations. However, the Fed made recent hawkish comments regarding US employment and growth. As such, incoming data remains all the more important for further signals.
Currency futures on NSE
The dollar-rupee February contract on the NSE was at 71.56 in the previous session. February contract open interest declined 3.49% in the previous session • We expect the US$INR to meet supply pressure at higher levels. Utilise upsides in the pair to initiate short positions.
|US$INR February futures contract (NSE)||View: Bearish on US$INR|
|Sell US$ in the range of 71.65 -71.73||Market Lot: US$1000|
|Target: 71.45 / 71.35||Stop Loss: 71.86|
|S1/ S2: 71.60 / 71.45||R1/R2:71.80 /71.95|
Coupon code: DIWALI. Offer valid till 10th November, 2019 .