Date- June 30, 2023
Place- New Delhi, India
Welcome to our daily pre-market update, where we provide you with a comprehensive analysis of the Indian rupee’s performance in the currency markets. In this article, we will delve into the previous day’s trading session, examining the key 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.
Today’s Chinese economic data has been a bit of a mixed bag. While profits at state-owned firms have seen a healthy increase of 10.9% from January to May, the manufacturing PMI has been stuck in a contraction phase for the past three months. Even the services PMI grew less than expected. Surprisingly, though, these developments haven’t had a major impact on the Chinese currency.
On the other side of the globe, the recent data from the US has been quite impressive! The GDP for the first quarter, from January to March, has been revised upwards to a solid 2.00%. That’s not all—unemployment claims experienced the biggest decrease in 20 months. These positive indicators have led traders to speculate about a potential interest rate hike by the Federal Reserve next month. However, it’s interesting to note that this hasn’t caused much volatility in most asset classes, except for the bond market.
Now, let’s talk about USDINR and its implied volatilities. Brace yourself—across different timeframes, the implied volatilities for USDINR have reached record lows! The one-month volatility suggests an average daily movement of around 12/15 paise. This means that traders can continue focusing on scalping trades, aiming for target price movements of 4/7 paise within the day. If you’re feeling adventurous, you might also consider implementing short straddle or short strangle strategies, but proceed with caution. Keep in mind that position sizes should be kept small to minimize the potential risk of significant losses in case of an unexpected gap opening.
To navigate the exciting world of USDINR trading, it’s important to keep a close eye on key levels. Support can be found at 81.85/90 on the spot market, while resistance is observed at 82.30/35. Monitoring these levels will provide you with valuable insights to make informed trading decisions. Get ready to seize the opportunities!
Hold on tight as we explore the thrilling world of GBPINR trading! Currently, we’re witnessing a corrective decline in GBPINR due to some interesting factors. The surge in US bond yields and profit-taking in GBPUSD have played a significant role in shaping the market dynamics. But fear not, as we anticipate GBPINR to maintain strong support levels around 102.30/40 in the June futures. There’s even a possibility of a slight price recovery towards the levels of 103.80/85. Keep your eyes peeled!
With no significant events scheduled from the UK, the direction of this currency pair will be influenced by risk trends and the trend of the US Dollar Index. It’s worth noting that Bank of England Governor Andrew Bailey recently justified the bank’s unexpected decision to raise interest rates by 50 basis points last week. Bailey emphasized the bank’s goal of reducing core inflation, which has proven to be stubbornly persistent, partly due to the strength of the UK labor market. Traders are now speculating on a potential 75-100 basis points rate hike by the BOE for the remainder of the year, potentially pushing the terminal rate to an impressive 6%!
Given this exciting landscape, it’s crucial for traders to closely monitor UK economic data in the future. Positive economic data could drive GBPUSD and GBPINR higher, as UK rates are expected to align with the Federal Reserve rate in the coming months. However, if the UK economy shows signs of slowing down, it may lead to a reversal in BOE rate bets, negatively impacting GBP. Get ready to ride the waves of opportunity!
Welcome to the captivating realm of EURINR trading! The European Central Bank has just released its Economic Bulletin, and there’s quite a bit to unpack. The annual growth rate of the euro area GDP deflator, which measures price changes for all goods and services, has hit a new record high of 6.2% in the first quarter of 2023. That’s an increase from 5.7% in the previous quarter. Despite the significant savings accumulated by households during the pandemic, they continue to spend. On top of that, the volatility in energy prices has given firms a convenient excuse to raise their prices. These factors are compelling the ECB to maintain a hawkish stance and consider further rate hikes, given the persistent inflationary pressures. Exciting times ahead!
In terms of recent market movements, EURINR has experienced a notable correction. Weak flash PMI, German IFO, and a surge in US bond yields have influenced the currency pair. However, fear not, as we anticipate EURINR to find strong support near the 89.00 level in the June futures. On the flip side, resistance levels can be anticipated around 89.65 and 89.90. Keep your trading strategies sharp!
When it comes to EURINR, we expect it to encounter strong support around the 89.00 level in June futures. The recent correction can be attributed to weak flash PMI, German IFO, and the surge in US bond yields. However, don’t lose hope, as we also anticipate potential resistance near the 89.65 and 89.90 levels. Let the excitement unfold!
Get ready for a thrilling ride in the world of JPYINR trading! As the USDJPY rises and JPYINR falls, traders are keeping a watchful eye for any signs of intervention in the currency market by the Ministry of Finance (MoF) or the Bank of Japan (BOJ) to boost the Yen. This cautionary note advises traders to exercise care with their positions, focus on intraday bets, and refrain from holding positions overnight. The bias for the day remains downward in JPYINR. Stay alert and embrace the excitement!
Key Points to Consider
Indian markets have the potential to open higher, following the positive trend in global markets over the past two sessions.
In the U.S., stocks experienced mixed results on Wednesday as Federal Reserve Chairman Jerome Powell reiterated the likelihood of two more interest rate hikes this year. Concerns about potential restrictions on AI-related exports to China also impacted technology stocks. Additionally, U.S. economic data showed a narrowing trade deficit in goods for May.
On Thursday, U.S. stocks ended on a higher note, with sectors like financials, materials, and industrials leading the gains. However, the tech-heavy Nasdaq was affected by higher Treasury yields. Financial stocks received a boost after passing stress tests, indicating resilience in the face of challenging economic scenarios.
The U.S. economy showed stronger-than-expected growth in the first quarter, according to a revision from the Commerce Department. China’s manufacturing activity improved in June but remained in contraction for the third consecutive month, suggesting ongoing weakness in their economy. In Japan, core inflation in Tokyo rose above the central bank’s target, indicating broader price increases and potential adjustments in monetary policy.
Asian markets exhibited mixed performance on the last day of the quarter, influenced by U.S. treasury yield movements and expectations of further tightening by the Federal Reserve.
In the Indian market, Nifty advanced for the second consecutive day, reaching fresh all-time highs. The current upward momentum could continue, with the next resistance levels projected around 19000-19200, while support is expected near 18646.
Please note that this information is for educational purposes only and should not be considered as financial advice.
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