FX Market Insight
USD/INR Spot reference {78.14}:
Yesterday, USD/INR had a slight gap up opening at 77.9950 against the previous day close of 77.9775. After opening the pair came down by 2 paisa then started depreciating slowly and steadily on upside. We saw dollar buying interest by importers and oil companies near 78.0000 levels in fixing. Throughout the day the pair was trading in a very tight range even after very sharp positive sentiment in the equity market. Overall the pair swung both sides touched a low of 77.9700 then high of 78.0925 and finally settled at 78.0725 levels.
Broad Market Snapshot:
US equity closed higher on the first day of trading after the long weekend and after the steep losses last week. In fact, yesterday’s rise was not a risk reset at all, fundamentally nothing has changed since last week. It isn’t unusual for stocks to rise after a heavy selloff.
The week ahead it is not as busy as last week, which means FX volatility is likely to be lower. However, it is possible that there will be some spill over from the weakness in commodity prices we have observed last and at the start of this week.
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:
Strong short-term resistance at 78.28, but a rise above 78.3150 would be taken as a sign of weakness that could take the price up towards 78.4975. In the short-term while staying below 78.28 it is more likely to fall below 78.1075, triggering further fall towards 77.9750 or even 77.8050. It needs to rise above 78.3150 to tone down the bearishness to some extent.
Immediate resistance would be at 78.2050 followed by 78.2800. Supports are near 78.1075 and 77.9750
Range for the day: 77.9750 to 78.2800
Other currency
On Wednesday, the yen hit a new 24-year low versus the dollar, after falling further overnight as US bond yields continued to increase, in sharp contrast to Japan’s consistently low-interest rates.
The yen was last trading at 136.4 per dollar, after hitting a low of 136.71 in early trade, its lowest level since October 1998.
The euro was trading at $1.053, up from a low of 1.0357 reached one week ago on the day the Federal Reserve boosted interest rates by a significant 75 basis points.
Sterling has increased modestly as well, and was last seen at $1.2257. Low commodity prices, such as iron ore, weighed on the Australian dollar, which remained weak at $0.6948.
Equity Insights
Indian Equity
The market is expected to open in the red, with the SGX Nifty indicating a negative start for the wider index in India, with a 100-point drop.
The BSE Sensex advanced 934 points, or 1.8 percent, to 52,532, while the Nifty50 advanced 289 points, or 1.88 percent, to 15,639, forming a bullish candle on the daily charts after two sessions of Doji candles.
The pivot charts show that the Nifty’s main support level is 15,500, followed by 15,300. The important resistance levels to watch for if the index rises are 15,750 and 15,900.
Other Equity
The Asia-Pacific region’s stocks were mixed on Wednesday, as Wall Street recovered from a tumultuous week. The Nikkei 225 lost early gains and is now trading below the flatline, while the Topix is up 0.14 percent. The Kospi dropped 1.1%, while the Kosdaq dropped 1.41 percent.
In Australia, the S&P/ASX 200 index fell 0.35 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%
Commodity Insights
OIL
Oil prices are falling as US Vice President Joe Biden advocates for lower gasoline costs.
Oil prices fell sharply in early trade on Wednesday, despite US President Joe Biden’s efforts to lower increasing gasoline costs, which included pressure on large US corporations to aid drivers during the country’s peak summer demand.
WTI crude futures in the United States declined $1.34, or 1.2 percent, to $108.18 a barrel, while Brent crude futures slid $1.33, or 1.2 percent, to $113.32 a barrel.
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| Economic Calendar |
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| Wednesday, June 22, 2022 |
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Time | Country | Event | Forecast | Previous |
11:30 | GBP | CPI (YoY) (May) | 9.1% | 9.0% |
18:00 | CAD | Core CPI (MoM) (May) | 0.4% | 0.7% |
19:00 | USD | Fed Chair Powell Testifies |
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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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