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 ended mildly lower yesterday by 2 paise, after getting support from near 72.10 levels. It is likely to open lower today tracking losses in Chinese Yuan as well as strength in the dollar. However, possibility of resumption of US-China trade talks could contain sharp losses • The US dollar index ended higher at 98.51 levels as the US President’s comments that US-China may initiate trade talks today improved risk sentiment. Initially, China indicated that it may not retaliate against the US President’s announcement of further higher tariff. This led the US President to indicate at possibility of US-China trade talks. CNY recovered from lows of 7.17 to currently 7.15. Recovery in CNY is positive for EM currencies.
Sovereign bond yields ended lower at 6.55% while overall it remains in a range. Investors await clarity on how the government is likely to utilise the fund received from the RBI • US 10-year yields rose to 1.49% as risk sentiment improved amid expectation of a US-China trade talks. 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 71.98 in the previous session. Open interest declined 1.19% 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 September futures contract (NSE)||View: Bearish on US$INR|
|Sell US$ in the range of 72.06 -72.10||Market Lot: US$1000|
|Target: 71.80 / 71.70||Stop Loss: 72.25|
|S1/ S2: 71.95 / 71.75||R1/R2:72.20 / 72.40|