FX Insights
USD/INR Spot reference {77.62}:
Friday, USD/INR had a gap down opening at 77.46 against the previous day close of 77.6050 tracking improved sentiment in the equity market. After opening immediately we saw constant slow dollar buying interest due to possibly MSCI dollar outflows. In the morning session the pair was trading with depreciative bias however in the afternoon the pair was trading in a very tight range of 5 paisa only. The pair touched a low of 77.4600 then high of 77.6600 and finally settled at 77.6225 areas.
Broad Market Snapshot
Even if US CPI inflation comes down a little bit more than economists’ expectations, the FED will most likely stay locked into delivering a 50 basis point rate hike over the next couple of policy decisions. Excitement is building that inflation in the US is peaking or has already peaked following some moderation in both the CPI and PCE measures recently. There could be further good news on this front on coming Friday when the consumer price index for May 2022 is due.
The ECB meets on Thursday this week and expectations are for the central bank to formally announce the end to its QE Program and after more than decade set the table for the interest rate hike at the July 2022 meeting.
China has been a major concern for the financial markets lately although some sense of normality is re-emerging in the worst hit region Shanghai which may boost risk appetite in the coming 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. Recently the PBOC continues to draw a line on further Yuan weakness, having started announcing stronger fixes as USD/CNY moved near to 6.8000.
Next RBI monetary policy meeting is on 6-8 June 2022 where another interest rate hike is expected.
USD/INR Price Action and Technical:
The resistance near 76.6950 has been holding since the last three weeks. Intraday If 77.6950 level breaks due to some unforeseen reason, then the up move could accelerate towards the 77.8050 area. 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 towards 78.00 levels. Staying below 77.6950 area will keep alive the possibility of falling towards 77.5950 and 77.4550 region again.
Since the last three weeks the pair has been stuck between 77.45-77.80 levels. Any side break we may see 25-30 paisa quick movement.
Range for the day: 77.4950 to 77.8050
Equity Insights
Indian Equity
The market is expected to open flat, as the wider index in India is projected to open with a loss of 40 points, based on SGX Nifty trends.
The BSE Sensex fell more than 660 points from its day’s high, finishing 49 points lower at 55,769, while the Nifty50 fell 44 points to 16,584 and formed a bearish candle on the daily charts at Friday’s close, signifying market jitters.
The pivot charts show that the Nifty’s important support level is 16,350, followed by 16,250. The major resistance levels to monitor if the index rises are 16,700 and 16,800.
Other Equity
Asian stocks opened flat on Monday as investors remained cautious ahead of a key US inflation figure, while the euro rose against the yen amid expectations that the European Central Bank will take a big step toward policy tightening this week.
Outside of Japan, MSCI’s broadest index of Asia-Pacific stocks down 0.1 percent, while Japan’s Nikkei fell 0.3 percent. S&P 500 and Nasdaq futures both rose 0.1 percent.
Commodity Insights
OIL
The price of oil has risen after Saudi Arabia raised crude prices.
Oil prices jumped more than $2 in early trading on Monday as Saudi Arabia boosted pricing for its oil sales in July, indicating how tight supply remains despite OPEC+ agreeing to increase output over the next two months.
Brent oil futures were up $1.80, or 1.5 percent, at $121.52 a barrel having hit an intraday high of $121.95, extending a 1.8 percent rise from Friday. After hitting a three-month high of $120.99, US West Texas Intermediate (WTI) crude futures were up $1.63, or 1.4 percent, at $120.50 a barrel. On Friday, the contract gained 1.7 percent.
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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