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Buy USDINR; target of 67.90 - 68.00: ICICI Direct

Subhash Helgaokar
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ICICI Direct's currency report on USDINR

Spot Currency

The rupee reversed its losses and ended up almost 0 . 46 % vs . US $ as receding concerns over domestic state election political turmoil as well as steady US $ led to some profit booking in rupee shorts • The US $ ended the session with mild gains failing to derive supports from sharp gains in US 10 - year yields. Euro recovered from lows near 1 . 177 to end the session above its supports near 1.18. We expect some consolidation in euro and GBP amid absence of any major triggers. Upcoming US - North Korean leaders summit as well as FOMC policy meeting are major events.

Benchmark yield  

Sovereign bonds were slightly higher yesterday. However, with crude oil prices in the vicinity of $ 80 / bl and sluggish demand for domestic debt, we can see yields rising to 8 % in the near tem • US 10 - year yields ended at 3.10 % , the highest levels since mid 2011 . We expect yields to continue to rise if crude oil prices see further gains.

Currency futures on NSE

The near - month dollar - rupee May contract on the NSE was at 67. 89 in the previous session. The May contract open interest increased 14. 13 % in previous day • We expect the US$INR to find supports at lower levels. Utilise downsides in the pair to initiate long positions.

Intra-day strategy

US$INR May futures contract (NSE)

View: Bullish on US$INR

Buy US$INR in the range of 67.65 - 67.75

Market Lot: US$1000

Target: 67.90/ 68.00

Stop Loss: 67.55

Support

Resistance

S1/ S2: 67.60 / 67.40

R1/R2:67.95 /68.15

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