DAILY MARKET REPORT: Monday - January 7, 2013
The Indian Rupee opened at 54.99 Levels after closing at 55.07 levels on Friday. The Intraday range for the rupee is seen between 54.80 - 55.20 levels. The rupee is likely to be under pressure in spite of FII’s pouring money in the local equities markets,
cityairnews
Jan 7, 2013 12:30
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The Indian Rupee opened at 54.99 Levels after closing at 55.07 levels on Friday. The Intraday range for the rupee is seen between 54.80 - 55.20 levels.
The rupee is likely to be under pressure in spite of FII’s pouring money in the local equities markets, on the worries of the high CAD (Current Account Deficit) that has touched record highs of 5.4% of GDP for the second quarter of 2012-13. The Indian equity markets will watch for better third quarter performance from corporate, results will start coming in from the second week of January.
The Indian Industrial production numbers may also have some impact on the trading sentiment this week. Industrial output and Inflation data are due on Friday, a key indicator ahead of the RBI's policy review on 29thJanuary 2013.
The Asian markets are trading mixed after monthly U.S. payrolls added to optimism in the global economic recovery. The temporary fix to US “Fiscal Cliff” gives markets a reason to cheer but the concerned will still stay as the US policy makers have a lot of work ahead in terms of increasing the debt ceiling and working through budget cuts and tax hikes.
The recent FOMC minutes surprised the markets across the globe, the general belief was that the Fed wasn't going to change monetary policy for the next 1 to 2 years but the FOMC minutes told a very different story. The fact that the FED members are considering terminating QE3 in 2013 which could be a game changer for the U.S. dollar.
If economic data continue to improve, market players will start considering this possibility more seriously. As a result, we expect U.S. economicreports to have an increased importance to the US dollar.
The US 10 year Treasury yield is trading lower at 1.89 levels. The Indian Federal bond yield closed lower at 7.93 levels on Friday. Bond yield is seen getting lower on the back of lack of fresh issuances of bonds in January and on the back of RBI buying bonds through OMOs. The RBI has bought Rs 47000 crores of bonds in the last one month and this bond purchase has helped take out floating stock from the market. The market is also confident of reporate cuts taking place in the RBI policy review on the 29th of January 2013.
Outlook: Importers were asked to cover at 54.20 - 54.40 levels, who missed the levels should cover on dips around 54.70 - 54.80 levels. The Exporters should wait for better levels to sell, as we have already covered partially around 55 plus levels. Overall view: USDINR Bullish
EURUSD: The Euro is currently trading at 1.3061 levels. The Euro has recovered from its earlier losses against the US dollar supported by better than expected economic reports. The PMI data from the region and German retail sales showed some stabilization and improvement. The EU Final services PMI data came out at 47.8 but both Italian and Spanish services PMI reading improved to 44.3 from 42.7 and 45.6 to 45.1. Although they continued to remain below 50.00, the readings were the second best monthly results in more than a year indicating a recovery in the service sector. Even the German Retail sales beat expectations rising by 1.2% versus 0.9% forecasted. Support is seen at 1.2950 levels while resistance is seen at 1.3119 levels.
GBP/USD: The Pound is trading at 1.6056 levels against the US Dollar. The UK Service PMI data which was published on Friday came at 48.9 v/s 50.20 in December. It was the first time in two years that the service sector activity contracted which pulled back the Pound against the US Dollar. The pair is expected to find a support near 1.5961 levels and the resistance is near 1.6250 levels. Overall in a range with bearish bias.
USD/JPY: Yen continues to weaken against the dollar and is trading at 88.09 levels. The Yen continued its weakness after the Prime Minister Shinzo Abe said on January 1st that the most urgent issue was to stop the yen from appreciating and deflation. On the data front, the service sector index rose to 51.5 in December from 51.4 from the previous month indicating an expansion. Near term support is at 86.
AUD/USD: Australian dollar is trading weaker at 1.0482 levels against the US Dollar. The Australian dollar posted modest losses because of the contraction in the service sector in the month of December. The country's services PMI dropped to 43.2 from 47.1, which might raise further concerns for the Reserve Bank of Australia. Near term support is seen at 1.0290 levels while immediate resistance is at 1.0588 levels. Gold: The gold is trading at $1661 level. The gold witnessed a worst session in the last week after the FOMC minutes revealed that some of the Fed members are willing to end the stimulus program this year. The pair is expected to find support at $1650 levels and resistance at $1675 levels. Oil: The WTI Crude is trading at $92.16 levels. The pair is expected to find support at $89.95 levels and resistance at $93.75 levels. Overall range bound. DI: The Dollar is trading above its one month high at 80.52 levels. The strong gains in the US dollar are undoubtedly attributed to the FOMC minutes released last week. The fact that the members are considering terminating the QE3 in this year is helping the US dollar to post sharp gains against the majors. On the data front, last week ‘s report showed that the Non-farm payrolls increased by 155k which was slightly better than expected (150k) but marginally weaker than the previous report. Strong near term support is seen at 79.60 levels and the resistance is seen at 81.45 levels. Overall the Dollar Index is bullish.
