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ICICI Direct's currency report on USDINR

Spot Currency

The rupee continued to appreciate on the back of positive domestic equities and no major rise in oil prices The dollar on Tuesday posted moderate gains. A larger-than-expected increase in US June consumer prices pushed T-note yields higher and supported gains in the dollar. Also, weakness in US stock indices on Tuesday spurred some liquidity

Currency futures on NSE

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The US$INR pair is struggling at higher levels. Due to no major move in the Dollar index and strong domestic equities, we feel a move towards 74.4 is expected The dollar-rupee July contract on the NSE was at | 74.61 in the last session. The open interest fell 6% for the July series

Intra-day strategy

"When we look at it from the inflation perspective, what is the contribution (of petrol and diesel) to inflation is something we have to keep in mind. So we should speak based on data on all these aspects," he told Mint, when asked if cut in fuel taxes is on the cards.

Subramanian said food inflation is a bigger concern. He said that reducing fuel taxes may not have a significant impact on retail inflation, since the weightage in the index is low.

"If you look at the last 6-7 years, anywhere between 35-60 percent of contribution to retail inflation comes from food inflation," he said as quoted by the publication.

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"Weightage of petrol and diesel in CPI (Consumer Price Index) is less than 3 percent while weightage of food is about 50 percent. Even if you consider second-round effects (of the fuel price hike), the weightage is about 5 percent. So if you do an analysis, it becomes very clear that the contribution is not that large."Subramanian also said rising crude oil prices are reflecting in overall inflation.

In June, CPI-based inflation rose 6.26 percent, slightly lower than 6.30 percent in May. Food inflation rose slightly to 5.15 percent in June, while inflation in the 'fuel and light' sub-group increased to 12.7 percent.

Article Source:- Moneycontrol

Finance chiefs of the G20 club of large economies have backed a landmark move to stop multinationals shifting profits into low-tax havens and win back hundreds of billions of dollars in lost revenues, a draft communique showed.

The agreement at talks in the Italian city of Venice is set to be finalized on Saturday and caps eight years of wrangling over the issue. The aim is for country leaders to give it a final blessing at an October summit in Rome.

The pact to establish a minimum global corporate tax rate of at least 15% in an attempt to squeeze more money out of tech giants like Amazon and Google as well as other multinationals able to shop around for the most attractive tax base.

While tax campaigners point to loopholes in the proposals and wanted a more ambitious crackdown, the move is a rare case of cross-border coordination in tax matters and could strip many tax havens of their appeal.

"We invite all members that have not yet joined the international agreement to do so," the communique seen by Reuters said of a number of countries still resisting the move.

Two sources said the statement was expected to be released at the end of talks on Saturday without changes.

Oil prices fell more than $1 a barrel on July 7 in another seesaw trading session, as investors feared this week's collapse in OPEC+ talks could mean more supply, not less, is on the way.

Crude markets have been volatile over the last two days following the breakdown of discussions between major oil producers Saudi Arabia and the United Arab Emirates, signaling investors are unclear on what the OPEC+ standoff means for worldwide production.

Brent crude settled at $73.43 a barrel, falling $1.10, or 1.5%. U.S. West Texas Intermediate settled at $72.20 a barrel, shedding $1.17 or 1.6%. Both benchmarks rallied more than $1 a barrel earlier in the session, similar to Tuesday's action.

The Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, have restrained supply for more than a year since demand crashed during the coronavirus pandemic.

The group is still maintaining nearly 6 million BPD of output cuts. It was expected to add to supply, but three days of meetings failed to close divisions between the Saudis and the Emiratis.

The Nifty rebounded and traded higher throughout the session to close more than half a percent higher on July 5, driven by banking & financials, metals, select auto, and FMCG stocks.

The index formed a bullish candle on the daily chart as the closing was higher than the opening level after forming a Hammer pattern on July 2. Experts feel 15,900 will be the crucial level to watch out for.

Though trading bias looks bullish, traders should wait for a close above 15,900 before creating long side bets, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.

The Nifty50 opened higher at 15,793.40 and hit the day’s high of 15,845.95 in the final hours of trade. The index climbed 112.20 points to close at 15,834.40.

As long as the Nifty sustains above the day’s minor gap area of 15,762–15,738, it can bounce to the higher end of the range by retesting lifetime highs of around 15,915, Mohammad said.

Insurance Regulatory and Development Authority of India (IRDAI) has rejected the license renewal application of Alankit Insurance TPA (third party administrator). This was on account of the non-submission of business data.

This means that Alankit cannot use the word 'TPA' in its company name. All existing agreements with insurance companies and network providers will be discontinued. Alternate steps including the appointment of another TPA will have to be taken.

A TPA acts as an intermediary between the insurance company and the policyholder. When the policyholder wants to lodge a health insurance claim, she is expected to contact the TPA, which in turn identifies a network hospital and guides the customer.

IRDAI said that Alankit TPA did not comply with the minimum business requirements. Each TPA has set targets for policy servicing based on the number of years of its operation.

The regulator has said that Alankit TPA can file an appeal with the Securities Appellate Tribunal against this order.

India's manufacturing sector activities contracted for the first time in 11 months in June as rise in coronavirus cases and strict containment measures adversely impacted demand as well as resulted in job losses, a monthly survey said on Thursday.

The seasonally-adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) declined to 48.1 in June from 50.8 in May.

The index fell below the critical 50.0 mark for the first time since July 2020. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.

The latest reading highlighted renewed contractions in factory orders, production, exports and quantities of purchases. Moreover, with business optimism fading over the month, job shedding continued, the survey said.

COVID-19 restrictions also curtailed international demand for Indian goods and new export orders decreased for the first time in ten months.

"The intensification of the COVID-19 crisis in India had a detrimental impact on the manufacturing economy. Growth of new orders, production, exports and input purchasing was interrupted in June as containment measures aimed at bringing the pandemic under control restrained demand," Pollyanna De Lima, Economics Associate Director at IHS Markit, said.

Lima, however, noted that in all cases, rates of contraction were softer than during the first lockdown.

Business confidence was dampened in June by uncertainty over when the pandemic can be brought under control. Companies were at their least optimistic for almost a year. "As a result of subdued optimism, jobs were shed again in June," Lima said.

On the price front, input costs increased further in June, with firms reporting higher prices for chemicals, electronic components, energy, metals, and plastics.

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Additional cost burdens were again transferred on to clients, with goods producers hiking their fees for the tenth straight month, the survey said.

"Out of the three broad areas of the manufacturing sector monitored by the survey, capital goods was the worst affected area in June. The output here declined at a steep rate due to a sharp fall in sales.

"The sector also saw the fastest contraction in buying levels and was the only to post job shedding," Lima said.

Article Source:- Moneycontrol

The dollar held firm on June 28 after slightly softer-than-expected US inflation did little to chip away investors' conviction that the Federal Reserve could tighten monetary policy if consumer price pressures continue to intensify.

The dollar's index against six other major currencies was steady at 91.793, having recovered from Friday's low of 91.524 hit in the wake of the inflation readings.

The euro was little changed at $1.19385, struggling to recover the $1.20 level while the dollar consolidated at 110.80 yen, not far from Wednesday's 15-month high of 110.105.

The U.S. personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased 0.5% after advancing 0.7% in April.

In the 12 months through May, the so-called core PCE price index, the Fed's favorite gauge of inflation, shot up 3.4%, the largest gain since April 1992.

Although inflation is expected to slow towards the year-end, signs of a tight labor market kept many investors fretting over wage-driven price pressures.

Among a raft of economic indicators due this week, Friday's payroll data is a key focus, with economists expecting an increase of 675,000 nonfarm payrolls.

"Depending on the outcome of the payroll's data, the market could start pricing in more chances of a rate hike next year," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

December 2022 Fed funds rate futures are almost fully pricing in a 0.25 percentage point rate hike by the end of next year.

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The general mood around an ongoing economic recovery remained solid, as Republican Senate negotiators on an infrastructure deal were optimistic about a $1.2 trillion bipartisan bill after President Joe Biden withdrew his threat to veto the measure unless a separate Democratic spending plan also passes Congress.

Cryptocurrencies bounced back from their weekend lows but ended the week lower.

Bitcoin traded at $32,820, having declined 3.1% last week. Ether fetched $1,831, not far from Tuesday's three-month low of $1,700, and registering its third straight week of loss.

Britain's financial regulator said last week that Binance, one of the world's largest cryptocurrency exchanges, cannot conduct any regulated activity and issued a warning to consumers about the platform.

Article Source:- Moneycontrol