DAILY MARKET REPORT: Wednesday - January 16, 2013
The Indian Rupee opened weaker at 54.71 levels after closing yesterday at 54.62 levels. The Intraday range for rupee is expected between 54.60 – 55.00 levels. The markets which were seen pricing in a rate cut in the up-coming monetary policy...
The Indian Rupee opened weaker at 54.71 levels after closing yesterday at 54.62 levels. The Intraday range for rupee is expected between 54.60 – 55.00 levels.
The markets which were seen pricing in a rate cut in the up-coming monetary policy after slightly improved WPI data, but the RBI Governor yesterday tempered the expectations by saying a that prices are still raising posing threat to increase in inflation. The RBI governor said though India's economic growth rate may be headed towards a decade-low, there is not much room for either monetary or fiscal stimulus.
The Asian markets are trading lower. According to rating agency Fitch, United States faces a "material risk" of losing its triple-A status if there is a repeat of the wrangling seen in 2011 over raising the country's self-imposed debt ceiling. Standard & Poor's has already downgraded the world's biggest economy, lowering the United States to AA+ in August 2011.
The issue of debt ceiling will continue to make the volatility in the global markets as the Democrats and republican are seen holding different views. The statement by the FED members added to the strength in Dollar index as they expect the growth to accelerate.
The Boston Fed President admitted that the Fed will eventually need to sell some assets but doesn't expect it to happen for most of this year. The chance of stopping the assets purchases is increasing as the majority is seen concerned about the growing instability in the financial markets.
The US 10 year treasury yield is trading lower at 1.82%. The Indian Federal bond yield closed at 7.83%.
OUTLOOK: Exporters wait for 55 plus levels to cover. While the Importers were asked to cover their open exposures around 54.20 - 54.40 levels. OVERALL: USD/INR: Bullish
EURUSD: The Euro is trading lower at 1.3287 levels against the US dollar. The Euro is trading lower against the US dollar taking cues from the selling in EUR/JPY and better than expected data from US. On the data front, the Eurozone's trade surplus increased to 11.0B from 8.2B in the month of November, but this did not have a lasting impact on the euro. In the meanwhile, Fitch has given a cautiously optimistic view on the euro debt crisis, saying that the crisis is probably over and that no country will exit from Euro. Support is at 1.3175 and resistance is at 1.3400.
GBP/USD: The Pound is trading weaker at 1.6065 levels against the US Dollar. The GBP weakened on account of weaker than expected PPI, which came at -0.2% v/s the previous month of 0.1%. The consumer Price Inflation came at 2.7% as forecasted. Overall in a range with bearish bias. The pair is expected to find a support near 1.5990 levels and the resistance is near 1.6180 levels. Overall in a range with bearish bias.
USDJPY: The Yen is trading at 88.25 levels. The Yen is trading slightly higher against the US dollar boosted by comments from Japan’s economy minister, who suggested that too weak of a Yen would hurt imports as well as consumers’ purchasing power. However, the weakness in the Yen will continue as the BOJ is likely to ease the policy further at its meeting on 21-22nd Jan. Support is at 86.85 and resistance is at 91.10.
AUD/USD: Australian dollar is trading at 1.0563 levels against the US Dollar. The AUD is trading flat against the US dollar on the absence of any major economic data yesterday. The employment data is scheduled for release today which will be significant for the AUD. Near term support is seen at 1.0500 levels while immediate resistance is at 1.0627 levels.
Gold: The Gold is trading stronger at $1682 levels. The Gold is trading near its two week high on account of risk aversion led by talks on debt ceiling. The near term support is seen at $1665 levels whereas resistance is seen at $1695 levels.
Crude oil: The crude is currently trading at 93.58 levels. The Oil prices were seen declining as the investors were seen concerned about the US debt ceiling. The political leaders hold different opinions which could make the largest economy to lose its credit rating. Support is near 92.80 and resistance is at 95.80 levels.
Dollar Index: The US dollar index has recovered modestly and trading at at 79.72 levels. The US dollar index is trading higher against the majors taking cues from the stronger than expected retail sales released yesterday. retail sales rose 0.5 percent after an upwardly revised 0.4 percent rise in November. Sales in November were previously reported to have gained 0.3 percent. The FOMC member Rosengren spoke yesterday and admitted that the Fed will have to continue with selling assets but he does not expect this to happen for the whole year. Support is near 78.99 and resistance is at 80.67 levels.
(Source: Corporate Communications, India Forex Advisors Pvt. Ltd.)