DAILY MARKET REPORT: Friday - January 11, 2013.

The Indian Rupee opened at 54.40 levels after closing yesterday at 54.57 levels. The Intraday range for the rupee is seen between 54.3-54.70 levels.

The Indian rupee appreciated as inflows continued in the local markets and on the back of improvement in Euro. The Euro hit a session high in European trade after good demand at a Spanish bond auction and ECB holding the interest rates.

India is set to release November factory numbers today with data likely to show that manufacturers barely increased production in the month. More crucially, the December inflation data is due on Monday with the expectation of inflation increasing to 7.40%.

The Asian shares rose on Friday amid an improving outlook for global economies and reduced concern over the Euro zone's debt problems. The trade data from China showed a balanced growth in both imports and exports, raising investor confidence and lifting risk assets.

The US dollar traded lower, its weakness was majorly seen after the European central bank holding the interest rates and central bank satisfied with the performance of the financial markets. The other important event happened overnight was the speeches by the FOMC members, St Louis Fed President Bullard and Kansas City President George.

Both were seen optimistic on the economy, George expects the growth to be more than 2% while Bullard expects it at 3.2%. The concern over the central banks ultra easy monetary policy was seen as it could cause a surge in inflation and could be disruptive for the financial markets. The comments reflect that both the voting members could support the end of asset purchase this year.

The US 10 year Treasury yield is trading higher at 1.91%. The Indian Federal bond yield closed 2 bps lower at 7.88%.

OUTLOOK: Exporters wait for better levels to cover, as we had already asked to cover partially at 55 plus levels. While the Importers should make the most of the dips coming in the market and cover their open exposures. OVERALL: USD/INR: Bullish

EURUSD: The Euro is trading higher at 1.3257 levels against the US dollar. It gained momentum after the ECB press conference yesterday, where Draghi said the interest rates will be kept unchanged at 0.75% as the economy is slowly showing signs of recovery.  He also added that the recent data is pointing towards some stabilization.  In addition to this, Spain’s first debt auction in 2013 was a successful event adding to signs that the region’s fiscal crisis is easing.  Support is at 1.3142 and resistance is at 1.3388.

GBPUSD: The Pound is trading at 1.6153 levels. Support is at 1.6050 and resistance at 1.6250 levels.

USDJPY: The Yen is trading lower at 88.93 levels. It is trading below its 2 ½ year low against the US dollar amid speculation that the new government will exert strong pressure on the central bank to take bold steps to defeat deflation.  On the data front, Japan posted a currentaccount deficit in November, for the first time in 10 months, at 222.4 billion Yen as its energy imports rose. This further put pressure on the Yen.  Support is at 86.85 and resistance is at 91.10.

AUDUSD: Australian dollar is trading at 1.0577 levels. It is trading close to 4 month high against the US dollar taking cues from strong trade data from China. The recent comments by the ECB about the European economy also boosted the demand for the riskier currencies. Support is near 1.0450 and resistance is at 1.0760.

Gold: Gold is trading at 1672 levels. The gold prices are trading higher amid ECB’s optimistic comments and China’s robust trade data which triggered broad gains in commodities. The support is near 1655 and resistance is near 1688.

Crude oil: The crude oil is trading at 93.85 levels.  Support is near 92.80 and resistance is at 95.80 levels.

Dollar Index: The US dollar index is trading lower at 79.80 levels.  The US dollar index fell below its one week low against the majors; following the boost in the risk appetite in the market after ECB kept the interest rates unchanged and gave optimistic comments over the economy. The weaker than expected unemployment claims also contributed for the fall in the dollar index. The jobless claims rose to 371k from 367k in the last week.  Support is near 79.20 and resistance is at 80.67 levels.

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