Category: 0. News

• USD/INR is marching towards 76.40 as DXY strengthens on jumbo rate hike expectations.
• Shanghai’s reopening and supply concerns in Libya have pushed the oil prices higher.
• The political crisis in Libya has seized up the oil exports.

The USD/INR pair has been bounced modestly in its early trade on Monday from 76.26. The major is scaling higher after printing a low of 75.24 on April 5. Surging oil prices and DXY have brought a slump in the demand for the Indian rupee.

Oil prices are advancing firmly as China has prepared to eradicate lockdown restrictions in Shanghai and supply concerns renew. After an almost three-week lockdown due to the Covid-19 resurgence, Shanghai is re-allowing economic activities in its region. This has cheered the oil bulls as the reopening of the world’s largest oil importer will support the aggregate demand. On the supply front, Libya could not deliver oil from its biggest oil field and shut another field due to political protests as per Reuters. An expected rebound in the aggregate demand along with renewed supply concerns has infused fresh blood in the oil counter.

Meanwhile, the US dollar index (DXY) is hovering around 101.00 backed by higher expectations of a jumbo rate hike by the Federal Reserve (Fed) in May. Federal Open Market Committee (FOMC) member James Bullard in his speech on Monday has bolstered the odds of aggressive guidance by the Fed. The FOMC member advocates a reversion of interest rates to 3.5% and that too by the end of the year. This has underpinned the greenback against the Indian rupee.

USD/INR

OVERVIEW
Today last price	76.357
Today Daily Change	0.0694
Today Daily Change %	0.09
Today daily open	76.2876

TRENDS
Daily SMA20	76.0149
Daily SMA50	75.811
Daily SMA100	75.3584
Daily SMA200	74.8345

LEVELS
Previous Daily High	76.4137
Previous Daily Low	76.2185
Previous Weekly High	76.5975
Previous Weekly Low	75.7848
Previous Monthly High	77.1725
Previous Monthly Low	75.2242
Daily Fibonacci 38.2%	76.2931
Daily Fibonacci 61.8%	76.3392
Daily Pivot Point S1	76.1995
Daily Pivot Point S2	76.1114
Daily Pivot Point S3	76.0043
Daily Pivot Point R1	76.3948
Daily Pivot Point R2	76.5019
Daily Pivot Point R3	76.59

FX Strategists at UOB Group Quek Ser Leang and Lee Sue Ann noted EUR/USD could still drop further in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that EUR ‘could drift lower to 1.0780’. We added, ‘last week’s low near 1.0755 is unlikely to come into the picture’. Our view was not wrong as EUR dropped to 1.0768 before closing at 1.0780. While downward momentum has not improved by much, EUR could weaken further to 1.0755. For today, a sustained decline below this level is unlikely (next support is at 1.0725). Resistance is at 1.0800 followed by 1.0820.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (18 Apr, spot at 1.0805). As highlighted, risk for EUR is on the downside even though it may trade above the solid support at 1.0755 for a couple of days first. Looking ahead, a breach of 1.0755 would shift the focus to 1.0725 followed by 1.0700. Overall, only a break of 1.0845 (‘strong resistance’ level was at 1.0885 yesterday) would indicate that the downside risk has dissipated.”

• GBP/JPY has surpassed the resistance of 166.00 as the pound strengthens on higher CPI.
• Higher energy bills are widening Japan’s fiscal deficit.
• Japan’s National CPI is seen at 1.3% against the prior print of 0.9%.

The GBP/JPY pair is witnessing a bullish open test-drive session on Tuesday amid broader weakness in the Japanese yen. The pair is advancing firmly in Tuesday’s session and has overstepped the round level resistance of 166.00. Although the momentum oscillators have turned extremely overbought, the pound bulls have shown no signs of exhaustion yet.

The Japanese yen is displaying broader weakness in the Fx domain as the rising oil prices have started widening the fiscal deficit in Japan’s economy. Japan is a leading importer of oil and other necessary commodities. Therefore, a serious jump in the prices of fossil fuels is hurting the yen. This week, the release of Japan’s National Consumer Prices Index (CPI) will be a major trigger for the cross. The Statistics Bureau of Japan is expected to release the yearly CPI at 1.3%, higher than the prior print of 0.9%. Despite, higher inflation expectations, the Bank of Japan (BOJ) is likely to keep the policy rates unchanged as the growth rate of Japan has yet not reached its pre-pandemic levels.

Meanwhile, the pound bulls are dominating amid the rising odds of a fourth-rate hike by the Bank of England (BOE) in May. A higher UK inflation print at 7% is compelling for more interest rate hikes. This week, UK’s GfK Group Consumer Confidence will remain in focus. A preliminary estimate for the Consumer Confidence is -33 against the prior print of -31.

GBP/JPY

OVERVIEW
Today last price	166.3
Today Daily Change	0.85
Today Daily Change %	0.51
Today daily open	165.45

TRENDS
Daily SMA20	162.03
Daily SMA50	157.81
Daily SMA100	155.79
Daily SMA200	154.22

LEVELS
Previous Daily High	165.47
Previous Daily Low	164.64
Previous Weekly High	165.44
Previous Weekly Low	161.67
Previous Monthly High	164.64
Previous Monthly Low	150.99
Daily Fibonacci 38.2%	165.15
Daily Fibonacci 61.8%	164.96
Daily Pivot Point S1	164.9
Daily Pivot Point S2	164.36
Daily Pivot Point S3	164.08
Daily Pivot Point R1	165.73
Daily Pivot Point R2	166.01
Daily Pivot Point R3	166.55

• AUD/USD is meeting a firm support area following the RBA minutes. 
• Bears lurking near a presumed resistance area through 0.74 the figure. 

AUD/USD is meeting a dynamic trendline support line and the bulls are eyeing a 38.2% Fibonacci retracement and a higher 50% mean reversion towards 0.7420. 

AUD/USD daily chart

As illustrated, there is a heavily bearish cycle but there has been bid that could equate to a leg higher. 

AUD/USD H1 chart

For the price to continue correcting, we have immediate resistance that will need to be cleared, however, the W-formation would be expected to hamstring the price at this juncture.

According to the analysts at Goldman Sachs, the People’s Bank of China (PBOC) will refrain from cutting the one-year and five-year Loan Prime Rates (LPR) on Wednesday.

Key quotes

“The PBOC seems concerned about “spillover effects” as other countries raised interest rates. For example, capital outflow from China.”

“Also, the PBOC is concerned that cutting interest rates would not have much effect on an economy in which credit demand was weak and the outlook for inflation uncertain.”

On Friday, China’s central bank kept the rates on the medium-term lending facility (MLF) unchanged although slashed the Reserve Requirement Ratio (RRR) by 25 bps, effective as of April 25.

The Australian dollar continues to post gains this week. AUD/USD has punched above the 0.74 line, and is currently trading at 0.7413, up 0.48% on the day. The Aussie has not had a losing daily session this week, and the currency is up 1.48% on the week. Australian jobs within expectations The Australian employment report […]

The dollar eased against high-yielding currencies but advanced against the yen in early European trading on Thursday, as the market absorbed the implications of Wednesday higher-than-expected inflation data out of the U.S.

By 3 AM ET (0700 GMT), the Dollar Index that tracks the greenback against a basket of developed market economies was down 0.1% at 93.995, trading below 94 for the first time this week as sterling and the Canadian, Aussie and New Zealand dollars all advanced.

The dollar’s only notable gains were against the yen, where it rose another 0.3% to 113.53, supported by ever stronger expectations of a widening interest rate differential with Japan.

The U.S. inflation rate hit a fresh 13-year high of 5.3% in September while core inflation stayed at 4.0% thanks only to a sharp drop in air fares. Three senior Federal Reserve officials – Raphael Bostic, Mary Daly and Thomas Barkin – will have the opportunity to give their two cents’ worth on the developments in the course of the day. Minutes from the Fed’s latest policy meeting, released on Wednesday, cemented expectations that the Fed will announce the start of the withdrawal of stimulus at next month.

U.S. weekly jobless claims, due at 8:30 AM ET (1230 GMT) head the day’s economic calendar.

In emerging markets, the dollar surged to a new record high of 9.1872 against the Turkish lira, after President Recep Tayyip Erdogan fired three deputy central bank governors, further undermining its independence and anti-inflation credibility. The dismissals included the only member of the CBRT’s  decision-making council to vote against its shock interest rate cut in September, which happened against a backdrop of near-20% inflation.

The Chinese yuan edged lower after producer price inflation rose to a 26-year high at 10.7% in September, above expectations. China is one of few countries for whom an easing of monetary policy is on the table as it grapples with an ongoing credit crunch in real estate. The official yuan fixing of 6.4414 was the highest in nearly a month.

Further inflationary pressure is in the pipeline for China’s factories after the government allowed industrial electricity prices to rise to ease the pressure on the country’s utilities earlier this week.  

The Chilean peso came off a 17-month low against the dollar after the country’s central bank raised its key rate by a chunky 125 basis points to 2.75%, more than the 100 basis point rise expected.

New Zealand dollar pummels greenback The New Zealand dollar has surged higher on Thursday and is currently trading at 0.7030, up 1.00% on the day. The currency has extended the previous day’s gains of 0.51%, as the US dollar finds itself in retreat mode. The US dollar index fell as low as 0.9376 today but […]

The Turkish lira risks falling out of favor with local investors, compounding a depreciation that’s dragged the currency to successive record lows over the past month.

So far, they’ve helped take the edge off the rout, selling more than $5 billion of their foreign-currency deposits in the three weeks through Oct. 1, according to central bank data. While the numbers can get amplified by changes in exchange rates, the headline figure is still the biggest draw down in half a year.

Now, with the prospect of another interest-rate cut looming large after the ouster of three key policy makers on Wednesday night, the fear is that households and companies may begin switching back into dollars and euros.

“The FX sales could quickly turn into FX purchases, creating extra pressure on the Turkish lira,” said Onur Ilgen, the head of the treasury at MUFG Bank Turkey in Istanbul, noting that recent foreign-currency sales were motivated by profit-taking.

Residents hold $233 billion of foreign currency, equivalent to around half of all deposits. While they’re nibble traders — buying dollars when the lira is strong and selling when it’s weak — over the longer-term they tend to accumulate hard currency. 

It’s a hedge against the inflation that’s debased the lira and eroded their savings. The Turkish currency is on track for its ninth straight year of depreciation, having lost more than 80% of its value since the end of 2012, the most in the developing world after the Argentine peso. 

“If locals become more concerned about the effects of lower interest rates on the lira, there is room for Turks to switch more deposits from liras into dollars,” said Nick Stadtmiller, director of EM at Medley Global Advisors in New York.

Surprise Cuts 

Last month, the central bank unexpectedly reduced interest rates to 18%, even with inflation running just shy of 20%. Investors say policy makers are falling in line with Erdogan’s call for lower interest rates while ignoring the risks to the outlook.

Speculation is building that the president is now paving the way for another cut after he fired three members of the central bank’s interest-rate setting committee in a midnight decree.

Read More: Erdogan Rids Turkey Interest-Rate Panel of Opponents to Cuts

Which side of the trade residents decide to take over the coming days and weeks also matters because foreign investors have already exited the market. They now hold less than 5% of the local-currency government debt stock, down from close to 30% in 2013.

“I think the downside risk for the lira with easier monetary policy is through domestic flows – not foreign outflows,” Stadtmiller said.

One redeeming factor for the lira is that a credit growth is slowing, which should help narrow the current-account deficit, reducing demand for foreign exchange in Turkey, according to Evren Kirikoglu, an Istanbul-based independent strategist.

Data on Monday showed the economy posted its first monthly surplus since Oct. 2020. 

But even then, with the lira breaching the psychologically important 9-per-dollar mark this week, local investors could “stop and even reverse” their foreign-currency purchases, Kirikoglu said.

GBPUSD Price Analysis – October 14 When the bulls’ pressure increase, the price will penetrate the resistance level of $1.37 and may touch $1.38 and $1.39 price level. In case the resistance level of $1.37 holds, the price may pull back and face the support level of $1.36, $1.35 and $1.34. GBPUSD Market Key levels: […]