DAILY MARKET REPORT: Thursday - January 17, 2013.

The Indian Rupee opened at 54.70 levels after closing yesterday at 54.69 levels. The Intraday range for the rupee is expected between 54.60 - 54.95 levels.
The RBI governor D. Subbarao on Wednesday emphasized that fighting inflation was top priority, a remark that could further dash hopes of a rate-cut later in January. He said “Controlling inflation is our most important work. Prices of almost every commodity, especially edible items and clothes, have registered an increase and inflation has affected every section of society, particularly the poor."
The Asian markets are trading positive as better-than-expected U.S. earnings lifted sentiment, but concerns over the global economic outlook and U.S. fiscal problem capped markets
The investors will be looking at the series of data to be released from world’s second largest economy on Friday.  The fourth-quarter GDP, December industrial output, retail sales and house price are due. The data will point out the growth in Asia’s biggest economy is whether it is improving or deteriorating.
A number of U.S. economic reports were released this week and more is expected today but none of these reports had a lasting impact on the dollar and that's because they did not improve or deteriorate enough to change the Federal Reserve's views on monetary policy.
The World Bank had cut its global growth forecast for this year as austerity measures, high unemployment and low business confidence weigh on economies in developed nations. The bank on Tuesday projected the world economy will expand 2.4%, down from a June forecast of 3%, after growing 2.3% in 2012.  The German Chancellor Angela Merkel’s government also reduced its growth forecast for Europe’s biggest economy.
The US 10 year Treasury yield is trading lower at 1.82%. The Indian Federal bond yield closed at 7.88%.
OUTLOOK: Rupee is seen consolidating from last few days; exporters wait for better levels to cover as they were already asked to cover at 55 plus levels. The Importers should make the most of the dips coming in the market, they were asked to cover around 54.20 – 54.40 levels. OVERALL: USD/INR: BULLISH
EURUSD: The Euro is trading lower at 1.3306 levels against the US dollar. The euro is trading slightly lower since last two days, after a senior euro zone official suggested the euro was at dangerously high levels.   The Euro was also down after the Fed's Beige Book survey said the US economy has picked up pace since November.  The economy of Germany has witnesses a contraction in the growth at the end of the 2012 as weaker global demand and recessions throughout Southern Europe triggered a slide in business investment. Support is at 1.3240 and resistance is at 1.3400.

GBP/USD:  The Pound is trading weaker at 1.5998 levels against the US Dollar. The British Pound, second worst performing currency after Japanese Yen lost value against the greenback for the fourth straight session. There were no data released overnight but the policy changes in the EU leading to increased concerns over the relationship between UK and the EU.  The pair is expected to find a support near 1.5820 levels and the resistance is near 1.6180 levels. Overall in a range with bearish bias.

USDJPY: The Yen is trading at 88.42 levels.  After trading on a positive note against the US dollar for the past couple of sessions, yen settled on a firm note.  As investors weighed the likelihood of new monetary easing measures by the Bank of Japan next week.  The Prime Minister Shinzo Abe has called for the inflation target to be doubled to 2 percent and said that he wants a BOJ chief “who can push through bold monetary policy”. Support is at 86.85 and resistance is at 91.10.
AUD/USD: Australian dollar is trading at 1.0526 levels against the US Dollar. Australian dollar is seen depreciating against US dollar. Signs of weakness are the increasing rate of unemployment and unexpected payroll cuts in December. This has discouraged hiring in many industries apart from mining. The local dollar declined against most of the major currencies. The jobless rate rose to 5.4 percent compared with a revised 5.3 percent the previous month.  Near term support is seen at 1.0450 levels while immediate resistance is at 1.0627 levels.

Gold:  The Gold is trading at $1678 levels. The Spot Gold was little changed from yesterday’s levels of $1680 and holding on to gains made in the past 7 days sessions. The near term support is seen at $1665 levels whereas resistance is seen at $1695 levels.
Crude oil: The crude is currently trading at 93.99 levels. Gains in crude oil were limited as weak European data pushed down other risk-sensitive assets such as equities, and as OPEC released a downbeat assessment of demand for its oil output in 2013.  Support is near 92.80 and resistance is at 95.80 levels.
Dollar Index: The US dollar index has recovered modestly and trading at 79.76 levels.  The US dollar index is trading on a higher note against the majors taking cues from the Fed Beige Book survey released yesterday. The results "indicated that economic activity has expanded since the previous Beige Book report, with all 12 districts characterising the pace of growth as either modest or moderate". On the data front, consumer prices were released this morning and the data continues to show muted inflationary pressures. CPI was flat in the month of December after falling 0.3% in November. Core prices which exclude volatile food and energy costs increased a mere 0.1%. Support is near 78.99 and resistance is at 80.67 levels.
(Source:Corporate Communications, India Forex Advisors Pvt Ltd.)