ICICI Direct Expects USDINR To Find Support At Lower Levels. Utilise Downsides In The Pair To Initiate Long Positions.
ICICI Direct's currency report on USDINR
Spot Currency
The rupee pared most of its gains as caution prevailed ahead of the crucial Fed monetary policy meeting. The rupee tested highs below 70 per US $ for the first time since December 3. It is expected to open further lower today as a less - than - expected dovish meeting has supported the dollar • The dollar was slightly changed yesterday as it recouped the losses post the Fed policy meeting. The Fed increased interest rates by 25 bps, as expected. However, it has raised caution on growth in 2019. This dovish interest rate hike kept the dollar in a range. Going forward, US inflation data as well as GDP growth would remain in focus to gauge the Fed’s rate hike ability.
Benchmark yield
Government bonds gained sharply yesterday supported by a strengthening rupee and lower oil prices. Bond markets are reacting to a shift in the yield curve in the US, which is heading lower on the back of tapered growth expectations • US treasury yields were lower as investors bought debt in yesterday’s session. Yields will find it difficult to climb their previous levels of near 3. 20 % unless oil reverses sharply or global risks subside.
Currency futures on NSE
The dollar - rupee December contract on the NSE was at 70. 43 in the previous session. December contract open interest declined 3. 06 % in the previous session • We expect the US$INR to find support at lower levels. Utilise downsides in the pair to initiate long positions.
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