Indian Rupee to remain range bound today

The USDINR remained range bound yesterday with lack of major trigger. The USDINR for December expiry closed the session at 52.74 after moving in a range of 52.99 to 52.65. In the domestic bond market, government bond yields fell after data showed food inflation eased to its slowest pace in nearly four years. Government data showed the wholesale price index-based food inflation rate in the week ended Dec. 10 fell to 1.81% from a year earlier, compared with 4.35% in the preceding week, as vegetable prices cooled. Easing food inflation and slowing economic growth have raised hopes of an imminent reversal in the central bank's prolonged monetary tightening stance and has fuelled a rally in bond prices.

In the global markets, the Euro held near $1.30 against the greenback as key US stock gauges gained, signaling that traders and investors are focusing on the positive economic data. The US dollar initially stepped up against the major currencies after a report showed unemployment claims unexpectedly fell in the latest week, eclipsing other important data on US GDP. A Commerce Department report that third quarter growth in GDP was revised down to 1.8% drove the dollar higher  initially, however, strong gains in the US stocks markets in the latter half stabilized the pair.

The Indian Rupee is expected to see modestly positive opening before the weekend as better than expected economic readings in the US is expected to push regional equities. Yesterday, the Dow Jones Industrial Average rose 0.5 percent while the broader S&P 500 index gained 0.8 percent.

Asian stock markets rose already advancing today in thin holiday trading. China’s benchmark in Shanghai gained 0.9% to 2,206.23 and Hong Kong’s Hang Seng rose 1.1% to 18,577.91. Japan’s financial markets are closed for a public holiday. Sydney’s S&P/ASX 200 jumped 1.2 % to 4,140.40, Seoul’s Kospi was up 1.3 % to 1,871.72 and Singapore added 0.3 % to 2,673.75.

We expect, the USDINR may trade stable due to holiday mood in the global market. EURINR and GBPINR may see some moderate correction.

Today’s data to watch

Event	GMT	EST5EDT	Consensus	Previous
EUR French Gross Domestic Product (QoQ)	06:30	01:30	0.40%	0.40%
EUR French Producer Prices (YoY)	07:45	02:45	5.20%	5.80%
GBP Index of Services (MoM)	09:30	04:30	-0.10%	0.10%
EUR Italian Consumer Confidence Index s.a.	10:00	05:00	95.50	96.50
USD Durable Goods Orders	13:30	08:30	2.00%	-0.50%
USD Durables Ex Transportation	13:30	08:30	0.40%	1.10%
USD Personal Income	13:30	08:30	0.40%	0.40%
USD Personal Spending	13:30	08:30	0.30%	0.10%
USD Personal Consumption Expenditure Deflator (YoY)	13:30	08:30	2.70%	2.70%
USD Personal Consumption Expenditure Core (MoM)	13:30	08:30	0.10%	0.10%
USD Personal Consumption Expenditure Core (YoY)	13:30	08:30	1.70%	1.70%
USD New Home Sales (MoM)	15:00	10:00	2.60%	1.30%
USD New Home Sales	15:00	10:00	315K	307K

Outlook and Strategy

USDINR Dec: The resistance is seen at 53.00 levels and if the market breaches the same then we can see a recovery towards 53.20 levels. The support is seen at 52.65 and then 52.51 levels. If the market breaks the support of 52.65 then it may see a healthy correction.

EURINR Dec: Trend is expected sideways for the session. The support is seen at 68.75 and resistance is seen at 69.17 and then 69.32 levels. One can look for selling on a pullback below the first resistance by keeping stoploss above 69.32 levels

JPYINR Dec:  The market has resistance at 67.69 and then 67.85 levels. The support is seen at 67.40 and then 67.15 levels. If market holds the support of 67.40, then we may see a recovery towards 67.80 levels.