FX Market Insight
USD/INR Spot reference {77.62}:
Yesterday, USD/INR had a gap down opening at 77.5200 tracking improved sentiment in the financial market against the previous day close of 77.5650. Throughout the day the pair was trading in a very tight range of 9-10 paisa only. Volume was very thin in the OTC market on account of the US holiday. The pair swung both sides touched a low of 77.47 then high of 77.5625 and finally settled at 77.5325 areas.
Broad Market Snapshot:
We have seen a shift in financial markets over the last couple of weeks, with interest rate hike concerns being replaced by global recession fears and then risk appetite improving after a challenging period. It’s likely to be another volatile week despite numerous bank holidays in many countries. Bank of Canada will get its chance to discuss interest rate policy when it meets on Wednesday. There were many comments last week regarding when, and by how much, the ECB will raise interest rates at its July 22 meeting. Markets may get a clearer picture when the Euro-zone CPI Flash will release data on coming Wednesday. The US will also release Non-Farm Payrolls on Friday this week.
China appears conflicted as to whether to allow more weakness to boost exports which would be a headwind for other Asian currencies as well.
OPEC+ meets this week on Thursday to discuss whether to raise output by more than the expected 432,000 bpd in July 2022.
Next RBI monetary policy meeting is between 6-8 June 2022, where another interest rate hike is expected. India also has PMIs, Q4 GDP and Trade Balance data in this week.
USD/INR Price Action and Technical:
Immediate resistance is near 77.68. It needs to rise above 77.68 levels to tone down the bearishness to some extent. The chart is not showing any signs of strength for breakdown above 77.6800 levels; but if it breaks, then the up move could accelerate towards 77.8050 areas. Some catalyst would be needed to drive the price above 77.8050 to trigger the wild up move. Unexpected rise above 77.8050 would not only erase the bearishness but also would attract buying with no clarity on the objective. Negative turn in the oscillators shows that the uptrend is slowing down.The pair is trading in a very tight range between 77.40 – 77.80 area since last two week. Any side break we may see 20-30 paisa quick movement.
Range for the day: 77.4950 to 77.8050
Equity Insights
Indian Equity
The market is projected to begin in the red, as the wider index in India is expected to open with a 55-point loss, based on SGX Nifty trends.
The BSE Sensex rose 1,041 points, or 1.9 percent, to 55,926, while the Nifty50 rose 309 points, or 1.9 percent, to 16,661, forming a bullish candle on daily charts.
The pivot charts show that the Nifty’s important support level is 16,550, followed by 16,360. The major resistance levels to monitor if the index rises are 16,800 and 17,000.
Other Equity
In early Tuesday trade, Asian stocks were down as investors awaited market response to the publication of official Chinese manufacturing activity statistics for May. The Shanghai Composite fell below the flat line, while the Shenzhen Component fell 0.135 percent. The Hang Seng index in Hong Kong fell 0.15 percent.
In Japan, the Nikkei 225 index fell 0.27 percent, while the Topix index fell 0.29 percent. The Kospi fell 0.08 percent in South Korea.
Commodity Insights
OIL
Oil prices have risen as a result of the EU’s ban on most Russian oil imports.
Oil prices increased on Tuesday after the European Union decided to cut Russian oil imports by the end of 2022, adding to concerns about a tighter market already pressured by growing demand ahead of the peak summer driving season in the United States and Europe.
Brent oil futures for July, which expire on Tuesday, were up 33 cents to $122 a barrel. The August contract, which is the most active, gained 33 cents to $117.93. WTI oil futures in the United States were trading at $117.31 a barrel, up $2.24 from Friday’s finish.
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| Economic Calendar |
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| Tuesday, May 31, 2022 |
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Time | Country | Event | Forecast | Previous |
07:00 | CNY | Manufacturing PMI (May) | 48.0 | 47.4 |
13:25 | EUR | German Unemployment Change (May) | -16K | -13K |
14:30 | EUR | CPI (YoY) (May) | 7.7% | 7.4% |
18:00 | CAD | GDP (MoM) (Mar) | 0.5% | 1.1% |
19:30 | USD | CB Consumer Confidence (May) | 103.9 | 107.3 |
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.
Sources