Welcome to our daily pre-market update, where we comprehensively analyze the Indian rupee’s performance in the currency markets. In this article, we will delve into the previous day’s trading session, examining the critical movements of the rupee against major currencies such as the US dollar (USD), British pound (GBP), Euro (EUR), and Japanese yen (JPY). Additionally, we will offer insights into what we can expect from the rupee in today’s trading session.
Date- July 21, 2023
Place- New Delhi, India
USDINR
The market bias for USDINR appears to be range-bound with a range between 81.95 and 82.15. Asian stocks are currently declining due to a drop in US tech shares. The offshore spot reference for USDINR is at 82.03/05, suggesting a possible uneventful trading session. The trading range for USDINR is expected to remain between 81.90 and 82.20, with a downward break potentially testing the 81.60/70 levels and an upward breakout targeting the 82.40/50 levels. Day traders should anticipate a narrower trading range of 81.95 to 82.15, while short straddle and strangle sellers must remain vigilant to adjust their positions if the range is breached.
GBPINR
GBPINR has been unpredictable after rallying for ten consecutive days from 103.50 to 108.00, only to decline for the next five trading days. The current prices are approaching a critical support level of 105.00/105.25. The stability of this support depends largely on the upcoming UK retail sales report. Subpar results could trigger a significant drop in GBPINR, while favorable data may lead to a rebound, especially with the currency pair currently being oversold. As a result, day traders should prepare for high volatility.
EURINR
The bias for EURINR is also range-bound with a range of 91.20-91.65. This currency pair has been in a consolidation phase for the past four trading sessions. Though the correction for EURINR has been less severe compared to GBPINR, further downward movement is anticipated. Strong support is expected around 90.50/75, with resistance levels near 91.60 and 91.90.
JPYINR
The JPYINR market bias is range-bound with a range between 58.45-58.85. Despite the rise in USDJPY, JPYINR opened with a gap down. Traders should remain cautious ahead of the Bank of Japan’s monetary policy meeting. Despite indications of maintaining the current policy, the BOJ has a history of making unexpected decisions. For the short term, JPYINR is expected to vary between 58.20 and 59.00 in July futures.
Key Points to Note Today
On Thursday, U.S. stocks mostly ended on a down note. Both the Nasdaq and the S&P 500 were impacted negatively due to underwhelming earnings results, although the Dow Jones Industrial Average managed to increase for a ninth consecutive day. This constitutes the longest winning streak in nearly six years, a testament to the ongoing ‘catch-up’ played by value stocks and other previously lagging sectors.
Tech stocks faced challenges after Netflix Inc. revealed earnings late on Wednesday that fell short on revenue, prompting a sharp drop of 8.4%. Additionally, Tesla Inc.’s shares dipped by 9.7% even though the electric vehicle producer surpassed Wall Street’s Q2 expectations – but not to the remarkable extent that some had hoped.
Global events that have influenced the market include escalations in the Ukraine conflict, further economic slowdown in China, and significant real estate losses for major U.S. banks, all of which unfolded within the past 24 hours.
Domestic economic data also played a role. The latest weekly jobless benefits claim data showed a decrease in first-time unemployment benefits applicants, reaching a two-month low. However, the Philadelphia Fed’s manufacturing activity index read negative 13.5 for July, a slight improvement from the previous month’s 13.7. On the other hand, June saw a decline in existing home sales, and the leading index of economic indicators dropped 0.7%, marking a 15-month continuous fall.
In international news, India has banned the export of non-basmati white rice due to an anticipated production shortfall caused by late seasonal monsoon rains damaging the crop, as per a government notice issued on Thursday.
Asian stocks followed suit on Friday, showing a decline after U.S. equities and Treasuries fell due to lackluster tech earnings and indications of a resilient labor market, potentially leading to another interest rate hike this year.
On a positive note, Nifty recorded a rise for the 6th consecutive session on July 20, influenced by strong global cues, and reached a new all-time high at 19991, closing at 19979, a 0.74% increase. Nifty is being supported by its 5-day EMA currently at 19778, with resistance observed at 20055. However, a cut in guidance by Infosys could exert pressure on both the IT sector and Nifty after opening.
Disclaimer
CurrencyVeda provides information purely for educational purposes. We are not financial advisors or brokers. The content we provide should not be taken as financial advice or a recommendation to buy or sell any sort of investment or security. Always perform your own due diligence and consult with a licensed professional before making any investment decision.
