Rupee – Weekly Wrap – Reliance Securities

The Indian rupee finished stronger for the week as risk appetite improved as concerns about the economic impact of the Omicron variant of the coronavirus eased.

The interbank sell-off of the USD / INR pair, the presence of the RBI in the market, the absence of importers and aggressive hedging of exporters in anticipation of dollar inflows at the end of the quarter supported this week.’

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Most regional and emerging currencies have appreciated against the US dollar this week and have provided support.

Meanwhile, the unwinding of long dollar positions and a rally in local stocks this week ahead of the Christmas holiday weekend also provided support.

In overseas markets, the US dollar is set to weaken against the currency basket, as fears of fallout fears from the Omicron coronavirus variant have eased higher risk currencies.

However, before the holidays and the extended long weekend in the United States, most of the major currency pairs were stuck in narrow ranges.

The euro and the pound rebounded this week, while the safe haven of the yen was weak as investors pulled back from safe haven assets.

Meanwhile, high inflation has pushed investors into safe-haven stocks.

The latest Headline PCE price index rose 0.61% month over month (MoM) and 5.73% year over year (YoY). The Core PCE (YoY) is now at 4.68%, well above the Fed’s 2% target rate.

Meanwhile, U.S. GDP grew at an annualized rate of 2.3%, according to Commerce Department data for the July-September quarter, and was up from the 2.1% pace estimated last month, but remained the slowest since Q2 2020 and weighed on the greenback. .

OUTLOOK

Going forward, price action will be choppy, limited to a range, and may experience very low volumes due to the holiday season.

An increase in Omicron cases globally could keep investors cautious and could pull investors back towards the greenback’s appeal as a safe haven.

However, at the national level, if exporters remain active, a greater appreciation is possible.

On the calendar, only data on US consumer confidence and jobless claims will have an impact on international markets.

Domestically, the budget deficit and current account data could move the market.

On the charts, the USDINR Spot pair on the weekly chart has formed a long bearish candlestick which is a sign of bearish reversal and may witness downward pressure to levels of 74.45-73.90 over the course of the chart. of the coming week. Resistance is at 75.15-75.56 levels.

The USDINR Spot pair could trade in a range of 74.45-75.60 levels during the coming week.

In overseas markets, the Dollar Index support area is between $ 95.34 and $ 94.30. The resistance zone is between $ 96.20 and $ 96.62.

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