Good morning, Finally 2 large events of the week FOMC and evergrande chaos seem to be behind, for now atleast. Rupee is expected to open around 73.78/80 area, amid mildly stronger dollar after FOMC last evening in which Fed said it would begin reducing the pace of asset purchases soon. This part was not announced as part of the speech though per se but was more an answer to press questions in which Powell answered to ” possibly look at ending tapering by mid of next year” and going by 15-20 Bn reduction mnthly, it would infer starting tapering in December this year. But he did add tapaering is not a precurser to rates rising and dot plots are not encouraging either on rate rises, consequence a Wuss move !

Reaction to the Fed’s mostly hawkish outcome is actually not in line with the usual. While the dollar index rose a little. US yields dropped and equities rallied. Against that backdrop and in light of the fairly resisted 74 level, rupee may not have a Follow-On weakness from y’day . Intraday, its direction will be more driven by how equities perform and whether the dollar index is able to build on yesterday’s uptick. Globally risk is looking fairly balanced with Evergrande also buying some time amid restructring plans ( not out of woods as yet so cautiousness is critical)..

Rupee tested and broke 73.85 briefly y’day . In the previous instances , pre Fed rally gave rise to post Fed collapse . Got to gauge if that’s the case this time too. For a start, pair likely to see a 73.70-90 band. I’d like to sell the rallies and wait to buy at best buy via options.