DAILY MARKET REPORT: Thursday - January 10, 2013

The Indian Rupee opened at 54.75 levels after closing yesterday at the same level. The Intraday range for the rupee is seen between 54.60-54.95 levels.

The IIP data is due on Friday and the inflation report on Monday will be key in further setting expectations ahead of that meeting. Both the data are important for the market as the rate decision at the end of this month is dependant on them. The improvement in Inflation figures could boost the expectation with decent IIP figures.

No major movement is expected as the market players seem to have discounted a 25-basis-point cut in key rates by the Reserve Bank of India at its policy review on Jan. 29. If the RBI surprises the market by cutting rates more than 25 bps then an immediate reaction would be seen in the local markets.

The Asian markets are trading positive after yen weakens and report from China showed that export growth in December was much higher than the expectations. Exports increased by 14.1% from a year earlier, the most since May. The Chinese trade surplus has almost doubled from a year earlier to $31.6 billion.

The Euro Zone will be getting the limelight of the investors after a long gap.The Euro is trading firm against the dollar at $1.3050 levels, ahead of the ECB's policy meeting, where the central bank is expected to keep interest rates steady. The other event to watch will be first debt sales of 2013 in Spain. The results of sales will determine the investors' appetite for the country's debt. The Spanish auction is also suspected to offer clues on the timing of a much-anticipated request by the government for international financial aid.

The US 10 year Treasury yield is trading higher at 1.87%. The Indian federal bond yiled closed at 7.90%.

Outlook : Exporter hold to cover, whereas importers should look to cover at current levels and on further dips. The overall outlook USDINR: Bullish

EURUSD: The Euro is currently trading at 1.3047 levels. The Euro is trading lower against the US dollar ahead of the ECB press conference, where Draghi's comments will be closely watched by the markets. The last time when the ECB met, Euro witnessed a fall as downgraded their 2012 and 2013 growth and inflation forecasts. Support is seen at 1.2950 levels while resistance is seen at 1.3119 levels.

GBPUSD: The Pound is trading at 1.6012 levels against the US Dollar. The Pound is trading lower against the US dollar on speculation the Bank of England could ease monetary policy further at its policy meeting today. On the data front, UK retail sales and PMI data have shown a deterioration adding concerns over the economic growth. The trade deficit narrowed slightly in November but failed to provide any support to the Pound. The pair is expected to find a support near 1.5950 levels and the resistance is near 1.6115 levels. Overall in a range with bearish bias.

USD/JPY: The Yen is trading slightly stronger at 88.04 against the US Dollar. Yen continues to depreciate against the US dollar as BOJ policy meeting is nearing. There are expectations Bank of Japan policy will take a fresh and bold approach to boost inflation later this month. The bank is widely expected to adopt a 2% inflation target in the policy meeting. Near term support is at 86.50 levels and the near term resistance is at 89.00 levels. Target of 84-85 levels achieved and further target it to 90 levels.

AUD/USD: Australian dollar is trading weaker at 1.0547 levels against the US Dollar. The Australian dollar is trading close to its three week high against the US dollar after China's exports jumped by 14% in December. The data showed China had a $US31.6 billion trade surplus in December, up from $19.6 billion the previous month. China is one of Australia's key trading partners and a major buyer of resources such as coal and iron ore. The Near term support is seen at 1.0460 levels while immediate resistance is at 1.0588 levels.

Gold: The gold is trading at $1656 level. The pair is expected to find support at $1640 levels and resistance at $1675 levels.

Oil: The WTI Crude is trading at $93.37 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 80.61 levels. The US dollar index is trading higher against the majors taking cues from weak Euro and continuous fall in Yen. Although, there were no major data released last night, we expect the upcoming global reports and events to be significant for the US dollar. President Obama is most likely to appoint Jack Lew as the next treasury secretary of the US replacing Tim Geithner. The treasury secretary is responsible for making exchange rate policy decisions. And therefore this appointment will be important from the dollar's perspective. Jack Lew is known to be supportive of risk appetite and the financial markets. On data front, Unemployment claims are scheduled for a release today. 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. 

(Source: Corporate Communications, India Forex Advisors Pvt. Ltd.)