FX Market Insight
USD/INR Spot reference {77.28}:
Yesterday, USD/INR had a gap down opening at 77.2900 levels after three days sharp up move against previous day close of 77.4650. In the morning session, we saw selling interest in the market due to IPO related dollar inflows and improved sentiment in the global equity market. Later in the afternoon after fixing the pair traded higher in thin volume and touched a high of 76.4450 levels. The pair was trading both ways and made a low of 77.2075 before closing at 77.3300.
Broad Market Snapshot:
The global equities market looks technically oversold, which allows a rebound in the coming days. There’s clearly a huge amount of worry for rate hike and growth risks in the financial markets. Fundamental reasons to buy are expectations of an imminent peak in inflation which will restore confidence for buying from current levels.
One of the biggest flashpoints in this interest rate battle will be closely watched by the US Consumer Price Index (CPI) report today. India’s CPI inflation release on Thursday this week will also be a key risk event. Any fears in the market that the RBI will be hiking interest rates too quickly will spark negative sentiment in the Indian equity market.
COVID lockdowns in China raise worries about lower demand from the world’s top oil importer. The EU is also struggling to find a coordinated response on a plan for total embargo on Russian oil.
USD/INR Price Action and Technicals:
Bullishness is receding a bit more now as seen in the short term chart. Yesterday’s price action also suggests that there is a good chance for the corrective dip towards 77.2075 again possible while the price stays below 77.4500 levels. Fall below 77.20 would attract more selling towards the 77.00 – 77.05 region. It must fall below 76.9500 levels to hint at the possibility of a stronger correction in the pair. Below 76.9500 levels it could get attracted towards the 76.70-76.75 support zone. It needs to stay above 77.4000 levels to improve the scope for further advance towards 77.55-77.60 areas. Next important resistance level to watch would be near 77.8050 areas.
Range for the day: 77.00 to 77.4500
Equity Insights
Indian Equity
The market is set to begin in the red, with the SGX Nifty indicating a 38-point fall in India’s wider index.
The BSE Sensex dropped 106 points to 54,365, while the Nifty50 dropped 62 points to 16,240, forming a small-bodied bearish candle on the daily charts that resembled an Inverted Hammer pattern.
The pivot charts show that the Nifty’s important support level is 16,157, with 16,073 being the next level. The main resistance levels to look for if the index rises are 16,364 and 16,488, respectively.
Other Equity
The Shanghai Composite had gained 1.43 percent, while the Shenzhen Component had gained 1.57 percent. The consumer price index (CPI) for April 2022 increased 0.4 percent month over month and 2.1 percent year over year, according to data provided earlier in the day. The producer pricing index (PPI) increased by 8% year over year.
The Hang Seng Index in Hong Kong increased by 1%.
The Nikkei 225 in Japan was up 0.37 percent, while the KOSPI in South Korea was down 0.06 percent.
The ASX 200 in Australia fell 0.14 percent, with the Westpac Consumer Sentiment index for May 2022 falling 5.6 percent, far more than the previous month’s 0.9 percent decrease.
Commodity Insights
OIL
Oil fell slightly in early Asian trade on Wednesday, extending the previous session’s loss, which was fueled by concerns about an economic slowdown and uncertainty over a European Union embargo on Russian oil.
Brent crude was down 86 cents, or 1.1 percent, to $101.60 per barrel. WTI crude in the United States slipped 80 cents, or 0.8 percent, to $98.96 a barrel.
Concerns over aggressive monetary policy tightening and sluggish economic growth sent Wall Street’s main indexes down in choppy trading on Tuesday.
On Tuesday, the dollar stayed at a two-decade high ahead of an inflation measurement that might provide insight into Fed policy, making crude more costly for purchasers using foreign currencies.
| Economic Calendar | ||||
| Wednesday, May 11, 2022 | ||||
| Time | Country | Event | Forecast | Previous |
| 13:30 | EUR | ECB President Lagarde Speaks | ||
| 18:00 | USD | Core CPI (MoM) (Apr) | 0.40% | 0.30% |
| 20:00 | USD | Crude Oil Inventories | -0.457M | 1.302M |
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Disclaimer: All information in this report is collected from various sites on the internet. Although we have taken all precautions for the correct representation of data however we do not take any responsibility for any errors and omissions. The technical analysis and views expressed are the author’s own views. We are not responsible for any losses on account of following the same.
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