FX Market Insight
USD/INR Spot reference {77.70}:
Yesterday, USD/INR had a gap up opening at 77.72 against the previous day close of 77.6300 tracking higher oil price. After opening the pair was trading in a very tight range of 4 paisa even after sharp selling in domestic equity. We heard the presence of RBI above 77.72 levels throughout the day. The pair touched a high of 77.73 just after opening then low of 77.69 near market close and finally settled at 77.7100 levels.
Broad Market Snapshot:
Inflation is the only metric that matters for the FED right now, and tension among global investors will likely remain high before Friday’s CPI release in the US. 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.
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. Everybody is very enthusiastic about the fact that China is reopening again.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 at 10 a.m. (IST) Today, another interest rate hike is expected.
USD/INR Price Action and Technical:
USD/INR is trading in a very range bound manner between 77.45 to 77.8050 levels since the last three week. Any side break we may see 25-30 paisa quick movement. While staying below 77.8050 levels the momentum in the short term chart is pointing to the downside .Below 77.5950 the correction might get a little sharper. Such a dip could go even further towards 77.4550 levels. It needs to rise above 77.8050 to lessen the chances for the expected corrective dip and start moving higher towards 77.9800 . Some catalyst would be needed to drive the price above 77.8050 to trigger the up move.
Chart structure and indicators suggest that the uptrend is weak below 77.8050 levels.
Range for the day: 77.4450 to 77.8050
Equity Insights
Indian Equity
The Indian stock market is set to begin in the green with SGX Nifty trends indicating a flat opening with a gain of 50 points for the wider index in India.
The BSE Sensex fell 568 points, or 1.02 percent, to 55,107, while the Nifty50 fell 153 points, or 0.92 percent, to 16,416 on the daily charts, forming a bearish candle.
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 Wednesday, Asia-Pacific stocks were bullish. Japan’s economy shrank an annualized 0.5% in the first quarter, slightly better than the initial estimate of a 1.0% contraction, revised government data showed on Wednesday, as consumption remained resilient in the face of resurgent COVID-19 infections.
The Hang Seng index in Hong Kong was significantly up with a gain of 1.44%
The Kospi index was in green with 0.36%percent in South Korea. The S&P/ASX 200 index in Australia gained 0.51%. The Nikkei 225 index in Japan gained almost 1%, while the Topix index gained 1.07% percent.
Commodity Insights
OIL
Investors are assessing the outlook for supply and demand as the US summer driving season ramps up and China emerges from virus lockdowns. Oil was steady after closing at a three-month high.
After finishing 0.8 percent higher on Tuesday, West Texas Intermediate futures moved above $119 a barrel. Brent remains steeply backwardated, a bullish structure where near-dated contracts are more expensive than later-dated ones. The prompt time spread for the global benchmark was $2.44 a barrel in backwardation on Wednesday, compared with $1.61 at the start of last month.
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| Economic Calendar |
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| Wednesday, Jun 08, 2022 |
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Time | Country | Event | Actual | Forecast |
05:20 | JPY | GDP (QoQ) (Q1) | -0.1% | -0.3% |
10:00 | INR | Interest Rate Decision |
| 4.80% |
14:00 | GBP | Construction PMI (May) |
| 56.6 |
20:00 | USD | Crude Oil Inventories |
| -1.917M |
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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