Morning Report


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Thursday, 30 July 2020

HeadLines

  • Dollar bogged at two-year low as Fed maintains dovish script
  • Federal Reserve sees dim economic outlook as coronavirus squeezes economy, keeps rate unchanged
  • Asian stocks set to rise on Fed policy, dollar hits two-year low
  • Oil edges up after sharp U.S. crude inventory drop

Major Currency Rates at 8 AM

Currencies

The dollar was mired at a more than two-year low on Thursday as the Federal Reserve repeated a pledge to limit damage from the pandemic as surging new coronavirus cases hamper the economy.

The dollar has been tumbling on expectations that the Fed will continue its ultra loose monetary policy for years to come and on speculation that it will allow inflation to run higher than it has previously indicated before raising interest rates. The dollar index fell 0.52% on Wednesday and steadied at around 93.275, its lowest in more than two years.

he dollar index against a basket of currencies gained 0.18% to 93.71, after dropping to 93.47 on Monday, the lowest since June 2018.

FED Policy

The Federal Reserve is expressing concern that the viral outbreak will act as a drag on the economy and hiring in coming months and that it plans to keep its benchmark short-term interest rate pegged near zero.

The Fed announced no new policies in its statement. The central bank said it will also continue to buy about $120 billion in Treasury and mortgage bonds each month, which are intended to inject cash into financial markets and spur borrowing and spending.

We expect that this loose monetary policy will keep dollar on back foot and the liquidity injection will keep the Equity markets in the Current Bull run. 

USD / INR Technical Analysis

USD / INR Daily Chart

The rupee is likely to open  around  74.92.

The Rupee is likely to have strong resistance at 75.36 (Bollinger Band)  and 75.56 (100 Day Moving Average)  and support at  74.76 (7 day Moving Average) and 74.50 (double bottom).

Equity

Asian stocks were set to track an upbeat Wall Street session on Thursday after the Federal Reserve kept interest rates at ultra-low levels, while the U.S. dollar fell to a two-year low.

The Dow Jones Industrial Average on Wednesday ended 0.6% higher, the S&P 500  gained 1.24% and the Nasdaq Composite added 1.35%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.28%, while its global stock index rose 0.81%. Australian S&P/ASX 200 futures  were up 0.9% while Japan’s Nikkei 225 futures were down 0.04%. Hong Kong’s Hang Seng index futures  rose 0.14%.

Singapore nifty SGX was trading plus 25 points  at 11,240 at 8 AM IST. Indian Equities are likely to be volatile due to Expiry today.

OIL

Oil prices rose on Wednesday after a steep drop in U.S. crude inventories, but another record day for coronavirus cases worldwide kept gains in check.

Brent crude futures settled at $43.75 a barrel, up 53 cents, or 1.2%. U.S. West Texas Intermediate crude futures CLc1 settled at $41.27 a barrel, gaining 23 cents, or 0.6%.

U.S. crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, the largest drawdown since December. 

Source : Reuters

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