FX Market Insight
USD/INR Spot reference {77.9225}:
Friday, USD/INR had a gap down opening at 78.0500 against the previous day close of 78.0700. After opening the pair started going up and made a high of 78.0950 levels tracking negative sentiment in the equity market. However, the pair was not able to cross 78.1075 zones possibly due to the presence of RBI in the market. In the afternoon session the pair was trading in a very tight range of 4-5 paisa only. We saw mild selling in the last half an hour trade which dragged the pair again near opening levels. Overall the pair was trading both ways, made a low of 78.0275 and finally settled at 78.0700 levels.
Broad Market Snapshot:
Last week felt like a big moment for global central banks, collectively, as well as financial markets more broadly. It was the moment when the majority accepted that inflation isn’t just a problem; it’s one that needs to be dealt with powerfully in order to prevent it from spiraling out of control and becoming ingrained in the economy.
Recession worries are also mounting as central banks around the world step up their fight against soaring inflation. The UD FED has signaled that it will take some time to tame inflation and that has driven expectations for a steady stream of massive rate hikes that will soon lead to a broader slowdown in the economy.
Looking into this week, we have a fairly light calendar with Flash PMI’s in the US, Europe consumer confidence and German IFO business confidence being the most interesting. Wednesday is all about FED Chair Powell’s semi-annual testimony before the Senate panel.
If the US PMI data this week comes out worse than expected or Powell seems to be leaning “less hawkish”, interest rate aggressive hike expectations may come down.
USD/INR Price Action and Technical:
Upticks could most probably be capped near 78.1075 for a downward drift towards a short-term support at 77.9050. Below 77.9050 the decline would have a chance to turn stronger to test 77.8050 and 77.6975.Unexpected rise above 78.3150 could increase the chances for extending the rise to 78.4975 levels. Immediate resistance would be at 78.1075 followed by 78.2800. Immediate support is near 77.9050.
Range for the day: 77.8050 to 78.1075
Other Currencies
On Monday, the Japanese yen continued under pressure, falling to a 24-year low after the Bank of Japan defied the trend in a week of huge central bank tightening by renewing its commitment to ultra-easy policy on Friday.
Despite French President Emmanuel Macron lost an absolute majority over the weekend, the euro remained stable.
The dollar took a breather after a tumultuous week that saw it fall significantly from a two-decade peak against key peers. However, by the end of last week, it had regained half of that as investors assessed the prospects for US monetary policy and the possibility of recession following the Federal Reserve’s largest rate hike since 1995.
The dollar index, which compares the green back to the yen, euro, and four other major currencies, remained unchanged at 104.70, stabilising below Wednesday’s high of 105.79, a level not seen since late 2002.
Despite French President Macron losing control of the National Assembly in parliamentary elections on Sunday, a huge loss that could send the country into political limbo, the euro rose 0.03 percent to $1.04935.
The pound fell 0.09 percent to $1.2209.
The Swiss franc fell 0.11 percent to 0.96845 dollars.
At $0.6934, the Australian dollar was down 0.03 percent.
Equity Market Insight
Indian Equity
The market is set to open in the red, with the SGX Nifty indicating a negative start for the wider index in India, with a 80-point drop.
After a huge bearish candlestick formation in the previous session, the BSE Sensex plummeted 135 points to 51,360, while the Nifty50 fell 67 points to 15,293 and created a Doji pattern on the daily charts. On a weekly basis, the index corrected 5.6 percent over the week and created a Bearish Belt Hold pattern.
The pivot charts show that the Nifty’s main support level is 15,184, followed by 15,000. The important resistance levels to watch for if the index rises are 15,401 and 15,509.
Other Equity
On Monday, Asian stocks were unable to maintain a rare advance as Wall Street futures lost early gains amid fears that the US Federal Reserve would reiterate its commitment to battling inflation with whatever rate hikes were necessary this week.
Outside of Japan, MSCI’s broadest index of Asia-Pacific equities down 0.8 percent, while Tokyo’s Nikkei fell 1.4 percent.
In South Korea, the Kospi led losses among the region’s major markets as it dropped 2.22%, with shares of industry heavyweight Samsung Electronics declining more than 2%.
The Shanghai Composite in mainland China sat slightly lower while the Shenzhen Component gained 0.824%.
Hong Kong’s Hang Seng index dipped 0.43%.
The Nikkei 225 in Japan traded 1.11% lower while the Topix index fell 0.96%.
Australia’s S&P/ASX 200 dipped 0.5%.
Commodity Insights
OIL
Early on Monday, oil prices fell as investors refocused on tight supply, however mood remained shaky following a 6% drop the previous day on fears about slowing global economic growth and fuel demand.
Brent oil futures LCOc1 were up 20 cents, or 0.2 percent, at $113.32 a barrel, after climbing as high as 1% earlier. Last week, front-month prices fell 7.3 percent, the first weekly drop in five weeks.
US West Texas Intermediate oil CLc1 was trading at $109.55 a barrel, down 1 cent after climbing more than $1 earlier in the day. Last week, front-month prices fell 9.2 percent, the first dip in eight weeks.
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