Rupee trades with a softer bias in a festival week

This week has one of the biggest continuous banking holidays in India. Exporters and future traders will be taking positions for Friday’s US September nonfarm payrolls. The numbers will give an indication on the starting of higher US interest rate cycle. Importers and short sellers will be forced to cover their near term payables if weakness persists throughout the week. I do not expect any surprises from the Reserve bank of India meeting this week. Technically as long as US dollar – Indian Rupee (usd/inr) does not break 63.76 (inter-bank) over the next six months, it could consolidate in 58.80-60.16-61.70-63.76 range. A sharp weakness (if any) this week can also spark short covering by the option trader. 

The direction of the US dollar will be the key. I was surprised by the reaction to India’s credit taking upgrade by S&P as the same had been factored in by the markets. I was listening to the Prime Minister Modi’s speech at Madison square garden New York, yesterday night. There is hope among global Indians to give back something to their nation but at the same time there is fear that bureaucratic hurdles could shatter their dreams. Just reduction of red tapism will attract investors from every book and corner of the globe and not just Indians. 

Usd/inr October 2014 (expiry on 29th October):  Resistance is at 61.9750 and only a break of 61.9750 will result in further rise to 62.3775. Initial support is at 61.42 and there will be sellers only below 61.42 or in case 61.9750 is not breached today. 

Euro/inr October 2014 (expiry on 29th October): Initial support is at 78.24 with 77.82 as the key support. Overall euro/inr is bearish as long as it trades below 79.02. 

Gbp/Inr October 2014 (expiry on 29th October): It needs to trade over 100.32 to rise to 100.9550. Initial support is at 100.06. There will be sellers if cable trades below 100.06 in UK session with 99.81 and 99.61 as the key supports. 

Jpy/Inr October 2014 (expiry on 29th October): There is a technical congestion between 56.10 and 56.20. As long as jpy/inr trades over 56.10-56.20 zone, it can rise to 56.8550 and 57.9475. Jobbers watch 56.5050.