WEEKLY RANGE – 69.70 (70.10 – 71.15 ) 71.53
Conclusion Weekly :-
IMPORT: - Strength in Indian rupee is opportunity for short to medium term foreign currency liabilities covering.
EXPORT: - Exporters can active +71.25 for shorter term.
CONCERN
Trump Impeachment uncertainty
The Trade War
The Global Growth Dilemma
Reserve Bank of India
Reserve Bank of India (RBI) delivered its fifth rate cut in a row with the stance has been linked to reviving growth, as the growth forecast was revised down markedly.
Repo rate or the rate at which RBI lends to banks has been brought down by 25 basis points or 0.25 per cent to 5.15 per cent. The RBI in its August bi-monthly review had cut repo rate by 35 basis points and also directed banks to follow the external benchmark for determining interest on loans.
The Reserve Bank of India on Friday lowered India's GDP growth estimate for the year to 6.1 per cent from the earlier figure of 6.9 per cent due to the on-going period of economic slowdown.
A sharp decline in core sector growth and manufacturing activities have resulted in the slowdown, forcing the central bank to reduce its previous growth estimate by 0.8 per cent.
Dollar index
The US Dollar Index (DXY) is an uptrend above its main daily simple moving averages (DSMAs).
DXY is trading in a range this Friday and is ending the week 0.60% down.
The US Non-Farm Payrolls came below expectations at 136K vs. 145K in September, while wages came out at 2.9% vs. 3.2% forecast.
EUR/USD
Despite our constructive outlook, we think the EUR’s move higher will be more of a slow grind rather than a rapid acceleration. In line with this, the current low-vol environment may favour options-based strategies to capture upside potential in EURUSD. Here, we think a 6m EURUSD 1.1570/1.2000 RKO call may offer an attractive risk/reward profile if our base case is realized.
The EUR’s still-difficult macro backdrop contributes to our cautious outlook. EUR strength may be tough for some to embrace until the outlook improves. Despite this, however, we think USD longs are looking increasingly stale across the board. With the USD’s carry advantage receding quickly, we see the potential for further gains in EURUSD to be driven by short covering – at least to start.
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