FX Market Insight
USD/INR Spot reference {77.36}: Monday, USD/INR had a sharp gap up opening above all time high at 77.1250 levels on account of negative sentiment in global equities against Friday close of 76.9150. After opening the pair traded sharply higher and we saw continuous dollar buying throughout the day which took the pair to a new all time high of 77.5200. The USD/INR depreciation was associated with Chinese Yuan depreciation and other Asian emerging currencies which were equally hit around the same time. Later in the afternoon session the pair was trading between 77.35 – 77.52 range with depreciative bias and finally closed at 77.4550 levels.
Broad Market Snapshot:
Fears of higher interest rate hike and slowing global growth dragged global equities lower for a third straight session. US 10 year treasury yields surged on Friday above 3.00% mark and are continuing to run higher today (CMP 3.05%). One of the biggest flashpoints in this interest rate battle will be US Consumer Price Index (CPI) report on coming Wednesday.
Yesterday ,Oil also plunged more than 5 % alongside equities due to tighter lockdown in China .China not abandoning their zero-COVID policy anytime soon will keep the short-term crude oil demand outlook vulnerable.
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.
USD/INR Price Action and Technicals:
Last three days price action ended with a sell set up in short term charts with immediate target of 77.15-77.20 levels. Even with such a fall the bullishness might not fade away. 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. Intraday resistance levels are spread between 77.40-77.45 area. It needs to rise above 77.4000 levels to improve the scope for further advance towards 77.60 areas. Next resistance level to watch would be near 77.8050. areas.
Range for the day: 77.05 to 77.45
Equity Insights
Indian Equity
The Indian stock market is forecasted to open in the red, as the broader index in India is expected to open with a drop of 88 points, according to SGX Nifty trends.
On the daily charts, the BSE Sensex dropped 365 points to 54,471, while the Nifty50 dropped 109 points to 16,302, forming a bullish candle that resembled a Spinning Top pattern formation, signifying indecisiveness among bulls and bears.
The pivot charts show that the Nifty’s main support level is 16,161, followed by 16,021. The major resistance levels to watch if the index rises are 16,423 and 16,544.
Other Equity
On Tuesday, Asian stocks fell to their lowest levels in nearly two years as investors sold riskier assets due to concerns about increased interest rates and their impact on economic development, while the dollar remained at 20-year highs.
MSCI’s broadest index of Asia-Pacific equities outside Japan was down 0.8 percent for the seventh straight session, bringing the year’s losses to 17 percent. The stock markets in Asia were a sea of red. The Nikkei 225 fell 0.9 percent, Australian equities down 2.5 percent, and Korean stocks fell 2%.
Commodity Insights
OIL
On Tuesday, oil prices fell more than 1%, continuing the previous day’s severe drop, as coronavirus lockdowns in China’s main oil importer, a strong dollar, and mounting recession threats fueled concerns about global demand.
After falling as low as $103.19, Brent crude slid $1.31, or 1.2 percent, to $104.63
After touching an intraday low of $100.44, US Wti Crude oil sank $1.25, or 1.2 percent, to $101.84 per barrel.
The Australian dollar fell to $0.6920, its lowest level since July 2020, after falling 1.7 percent overnight, which was ascribed to global asset price falls.
| Economic Calendar | ||||
| Time | Country | Event | Forecast | Previous |
| 14:30 | EUR | German ZEW Economic Sentiment (May) | -42.0 | -41.0 |
| 21:30 | USD | EIA Short-Term Energy Outlook |
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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