FX Market Insight
USD/INR Spot reference {77.70}:
Yesterday, USD/INR had a gap up opening at 77.66 against the previous day close of 77.6225 tracking higher oil price. After opening the pair was trading in a very tight range of 5-6 paisa only. We heard oil companies were buying dollars throughout the day. The pair touched a high of 77.6750 just after opening then low of 77.6150 near market close and finally settled at 77.6300 levels.
Broad Market Snapshot:
After a recent rally from below 102, the US dollar index, which monitors the greenback against a basket of peers, was at 102.629.
The Japanese yen was trading at 132.72 per dollar, still lower than the previous week’s lows of around 128. The Australian dollar was trading at $0.7164, down from $0.72 the day before.
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.
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.
RBI monetary policy meeting is on 6-8 June 2022 where another interest rate hike is expected.
USD/INR Price Action and Technical:
It must stay below 77.8050 to hint that it might get back into the sideways range that it was trading for about 30 days. Unexpected rise above 77.8050 could trigger an upside move towards 77.98, turning the outlook less bearish. Unexpected rise above 77.8050 would not only lessen the chances for the down move but also could attract buyers. It needs to stay below 77.8050 to lessen the chances for the expected up move and start falling towards 77.5950 or lower. Below 77.5950 the correction might get a little sharper towards 77.4475. As of now such a strong dip is not visible.
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 Indian stock market is set to begin in the red, with SGX Nifty trends indicating a gap-down opening with a loss of 95 points for the wider index in India.
On the daily charts, the BSE Sensex sank 94 points to 55,675, while the Nifty50 dipped 15 points to 16,570, forming a bullish candle because the closing was higher than the starting levels.
The pivot charts show that the Nifty’s main support level is 16,350, followed by 16,250 The major resistance levels to monitor if the index rises are 16,600 and 16,700.
Other Equity
In early trading on Tuesday, Asia-Pacific stocks were neutral.
On Tuesday at 12:30 a.m. HK/SIN, the Reserve Bank of Australia is set to announce its latest interest rate decision.
The Hang Seng index in Hong Kong fell 0.84 percent as shares of HSBC fell over 2%.
The Kospi declined 1.17 percent in South Korea. The S&P/ASX 200 index in Australia fell 0.89 percent.The Nikkei 225 index in Japan edged up a smidgeon, while the Topix index gained 0.49 percent.Outside of Japan, MSCI’s broadest index of Asia-Pacific equities traded at 1%.
Commodity Insights
OIL
As a result of the OPEC+ agreement, oil prices have fallen below $120 per barrel.
After tumultuous activity on Monday, oil prices closed marginally lower, encouraged by Saudi Arabia lifting its July crude pricing but tempered by worries that a greater output target for OPEC+ oil exporters will alleviate tight supplies.
After hitting an intraday high of $121.95, Brent crude lost 21 cents, or 0.2 percent, to close at $119.51 a barrel. After touching a three-month high of $120.99, US West Texas Intermediate (WTI) oil futures lost 37 cents, or 0.3 percent, to end at $118.50 a barrel. Earlier in the session, the benchmark declined by $1.
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| Economic Calendar |
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| Tuesday, Jun 07, 2022 |
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Time | Country | Event | Forecast | Previous |
10:00 | AUD | RBA Interest Rate Decision (Jun) | 0.60% | 0.35% |
10:00 | AUD | RBA Rate Statement |
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14:00 | GBP | Composite PMI (May) | 51.8 | 51.8 |
14:00 | GBP | Services PMI (May) | 51.8 | 51.8 |
19:30 | CAD | Ivey PMI (May) |
| 66.3 |
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.
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