USDINR : Weekly outlook 8-12 April13. Dollar May rally in coming week

Technical Outlook

USDINR : Rupee on daily timeframe in technical chart looks weaker, the pair is likely to touch 55.09 (last month high) this week.RSI is indicating more upside can’t be ruled out and sharp rally in last three session likely to weaker rupee in short term. Rupee could find first support around 54.67 and later around 55.47.200 day EMA around 54.30 could be the strong support for rupee on chart. Any upside moves beyond that is likely to limited in coming trading session. However if rupee breach a crucial support of 55.09 and close below to this level it could test its nov12 low at 55.73.Still a very strong support around 55.34 can save the rupee from fall. Contrary to this view, if rupee sustain above 54.67 levels it can surprise market and find resistance around 54.43.Range for the week 55.31-54.43. 

Fundamental Outlook

The United States created the fewest number of jobs in March in nine months, adding to a string of reports suggesting companies have cut back on new hires and that the economy is slowing again. The U.S. added a seasonally adjusted 88,000 jobs — the smallest increase since last June — and nearly half-a-million people stopped looking for work last month, according to data issued by the Labor Department Friday. Lower than estimated data suggest weaker equity market outlook and growth concern will keep the pressure on rupee against dollar. However Dollax recent correction and strengthening in Euro & pound on Friday can limit the loss on rupee front.

India's large current account deficit (CAD) will remain a source of "discomfort" for the market and make it difficult for the Indian rupee to appreciate in a sustained manner. A recent report published in Livemint put more prospective on rupee's depreciation, it states,Carry trades in India’s rupee, the world’s second-highest yielding currency since 2010, are losing their appeal after the cost to hedge against foreign-exchange swings surged to a two-year high. The increase in forward-market costs reflects both a surge in local short- term borrowing costs and rising bets the Indian currency is headed for a third year of losses, according to the lenders. A cash squeeze in India’s banking system has kept the forward premium elevated and this has killed the carry trade as arbitrage lost its allure, according to IndusInd Bank. Costlier forward contracts will also deter overseas loans for rupee-denominated expenditure, HSBC’s Dave said. The forward premium will drop and carry trade will pick up only when there are signs of strong rupee appreciation.

Complied by Amit Daga.

Disclaimer : Read the Disclaimer in earlier posts. This post is for information purpose only and not advising any individual or organization on taking any trading decision. The blogger may or may not have any personal interest in above said report.