FX Market Insight
USD/INR Spot reference {78.00}:
Yesterday, USD/INR had a gap down opening at 77.9400 tracking lower crude oil price against the previous day close of 78.0700. After opening the pair went up by 4 paisa then started appreciating slowly and steadily on the downside. We saw dollar buying interest by importers, oil companies below 77.9000 support zone. Overall the pair swung both sides touched a low of 78.8800 then high of 78.0325 and finally settled at 77.9775 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:
Yesterday short-term support at 77.8800 has a chance to hold for a recovery towards 78.1075 then 78.2000 levels, but staying below 78.00 would be taken as a sign of weakness that could bring the price down towards 77.8050 and 77.7025 levels. Below 77.8050 the chart is more likely to turn more bearish. It needs to stay above 78.1075 to tone down the bearishness to some extent. Unexpected rise above 78.3150 could increase the chances for extending the rise to 78.4975 levels.
Range for the day: 77.8050 to 78.1475
Other Currencies
The euro rose on Monday as markets focused on European Central Bank tools to fight fragmentation in the currency bloc, shrugging off the risk of political gridlock in France. The dollar index, which measures the value of the greenback against a basket of currencies, was at 104.407.
The Japanese yen was trading at 135.05 per dollar, down from a high of 134. The Australian dollar was trading at $0.6981, still weak compared to last week’s high of $0.70.
The Australian dollar climbed on Tuesday after the Reserve Bank of Australia signalled that further rate hikes are on the horizon, but the gain was limited by weaker commodity prices, while the Japanese yen remained at a 24-year low.
Equity Market Insight
Indian Equity
The market is set to open in the green, with the SGX Nifty indicating a favourable start for the wider index in India, with a 80 point gain.
On the daily charts, the BSE Sensex closed 237 points higher at 51,598, while the Nifty50 rose 57 points to 15,350, forming a Hammer or Doji pattern.
The pivot charts show that the Nifty’s main support level is 15,300, followed by 15,200. The important resistance levels to monitor if the index rises are 15,500 and 15,600.
Other Equity
Asia- On Tuesday, Pacific markets were mainly positive, with bitcoin continuing to advance after a recent rally. Ahead of the release of meeting minutes this morning, Australia’s central bank forecasts inflation will peak before the end of the year.
The Nikkei 225 in Japan was up 1.67 percent, while the Topix was up 1.72 percent. The South Korean Kospi was also in the green, trading 0.13 percent higher. The S&P/ASX 200 index in Australia jumped 1.14 percent, while the MSCI’s broadest index of Asia-Pacific stocks outside Japan increased 0.12 percent.
Commodity Insights
OIL
The price of oil is rising due to market fears over supply.
Oil prices gained 1% in early trade on Tuesday, recouping some of last week’s losses as the focus shifted back to tight crude and fuel product supplies vs fears about demand being hurt by a recession in the future.
Brent oil futures were up $1.32, or 1.2 percent, at $115.45 a barrel, following a 0.9 percent rise the day before. Last week, the benchmark contract plummeted 7.3 percent, the first weekly drop in five weeks.
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Economic Calendar |
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Tuesday, June 21, 2022 |
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Time |
Country |
Event |
Forecast |
Previous |
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18:00 |
CAD |
Core Retail Sales (MoM) (Apr) |
0.6% |
2.4% |
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19:30 |
USD |
Existing Home Sales (May) |
5.39M |
5.61M |
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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