FX Market Insight
USD/INR Spot reference {77.55}:
Yesterday, USD/INR had a gap down opening at 77.2050 levels against the previous day close of 77.33. We saw importers covering below 77.20 levels however the pair was not able to cross even 77.30 levels on account of IPO related dollar inflows and improved sentiment in the global equity market. During the day the pair swung both sides in a very tight range of 10 paisa only. Almost in the major part of the trading session the pair was moving in a range bound manner and finally settled at 77.2400 levels.
Broad Market Snapshot:
US Dow Jones sharply ended lower -1.02 % and the Nasdaq dropped more than -3.00% falling for a fifth straight day after US CPI inflation data did little to ease investor worries. US CPI dipped in April from 8.50% to 8.30%, but still came in above the forecast of 8.10%.
The global equities market looks technically oversold, which allows a rebound in the coming days.
US inflation data will no doubt result in some headlines proclaiming an “inflation peak”, however it seems premature to declare that inflation is on its way down. Higher interest rates will curtail inflation, but it will take time. In the current situation there are huge unknowns around price pressures due to the Russia/Ukraine war, China’s slowdown and the impact on supply chains due to China’s zero-COVID policy.
India’s CPI inflation release will also be a key risk event today. 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:
The pair needs to stay above 77.4500 levels to improve the scope for further advance towards 77.6050 areas. Next important resistance level to watch would be near 77.8050 areas. Intraday resistance near 77.6050 should cap upside attempts for a decline again towards an important support near 77.30 areas. Unexpected dip below 77.30 would hint at the possibility of a slightly stronger pullback towards 77.20 areas. It must fall below 76.95 levels to hint at the possibility of a stronger correction in the pair. Below 76.95 levels it could get attracted towards the 76.70-76.75 support zone.
Range for the day: 77.30 to 77.6050
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 Indian stock market is set to begin in the red, with the SGX Nifty indicating a gap-down opening of 149 points for the wider index in India.
On the daily charts, the BSE Sensex plummeted 276 points to 54,088, while the Nifty50 fell 73 points to 16,167, forming a bearish candle that resembled a Hammer pattern.
The pivot charts show that the Nifty’s important support level is 15855, followed by 15,735. The major resistance levels to monitor if the index rises are 16,000 and 16,356.
Other Equity
After figures suggest the consumer price index in April remained around its highest level in more than 40 years, shares in Asia-Pacific fell in early Thursday trade after overnight losses on Wall Street.
Japan’s Nikkei 225 index declined 1.57 percent. The Topix index dropped 1%. The Kospi dropped 0.86 percent in South Korea. The S&P/ASX 200 index of Australian equities fell 0.22 percent. Outside of Japan, MSCI’s broadest index of Asia-Pacific stocks fell 0.44 percent.
Commodity Insights
OIL
Oil prices surged more than 5% on Wednesday as Russian gas deliveries to Europe decreased and Russia sanctioned certain European gas businesses, adding to global energy market turmoil.
Brent crude rose $5.05 a barrel, or 4.9 percent, to $107.51 a barrel, while US West Texas Intermediate crude rose $5.95 a barrel, or 6%, to $105.71.
Prices have risen over 35% so far this year, bolstered by supply concerns after Russia’s invasion of Ukraine in February.
Price gains have also been capped by worries about a fall in demand from China, as it attempts to curb the spread of the coronavirus through lockdowns.
| Economic Calendar | ||||
| Thursday, May 12, 2022 | ||||
| Time | Country | Event | Forecast | Previous |
| 11:30 | GBP | GDP (QoQ) (Q1) | 1.0% | 1.3% |
| 11:30 | GBP | GDP (YoY) (Q1) | 9.0% | 6.6% |
| 11:30 | GBP | Manufacturing Production (MoM) (Mar) | -0.5% | -0.4% |
| 11:30 | GBP | GDP (MoM) | 0.0% | 0.1% |
| 11:30 | GBP | Monthly GDP 3M/3M Change | 1.0% | 1.0% |
| 18:00 | USD | PPI (MoM) (Apr) | 0.5% | 1.4% |
| 18:00 | USD | Initial Jobless Claims | 195K | 200K |
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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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