DAILY MARKET REPORT: Friday - November 16, 2012
The Indian Rupee opened at 54.85 levels after closing yesterday at 54.70 levels. The Intraday range for the rupee is expected between 54.65-55.10 levels. The Indian Finance minister P Chidambaram has indicated that the government may help...
The Indian Rupee opened at 54.85 levels after closing yesterday at 54.70 levels. The Intraday range for the rupee is expected between 54.65-55.10 levels.
The Indian Finance minister P Chidambaram has indicated that the government may help some of the stressed sectors like infrastructure, steel and construction to recover from the current slowdown and hoped that interest rates will come down to boost economic revival. The lower inflation and poor IIP figures have again increased some expectations of a rate cut by RBI its mid-quarterly review of monetary policy on 18th December , but RBI may still be little cautious.
The Asian equity market rose amid speculation an election next month will hand power to an opposition party that advocates more aggressive monetary easing in the world’s third-biggest economy, Japan.
The US President Barack Obama and Congressional leaders will begin budget talks today, amid fears the United States will stumble back into recession if no deal is reached to avoid some of the $600 billion in spending cuts and tax hikes due to start taking effect in January.
The Euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France. For all of 2012, the European Commission sees the Euro zone contracting 0.4%, while growing just 0.1% in 2013.
The weaker US Weekly Jobless Claims were expected on account of Hurricane Sandy distortions. The Middle Eastern tensions also spiked higher overnight with Israel bombing Gaza.
The uncertainty is still at its peak with concern about the U.S. budget struggle, the Euro zone's deterioration into recession and violence in the Middle East. There will be plenty of negative headlines in coming weeks that weigh on risk assets and boost the safe haven demand. The US 10 year treasury yield is trading at lower at 1.58%.
Outlook: Exporters sell close to 54.80-90 at least 40-50% for next 2 months and partially for longer term (8-12 months only). The rupee is still expected to be weak with some dips in between. Uncovered Importers are still recommended to cover on dips close to 54-54.50. Overall USD/INR pair remains in a bullish trend.
EURUSD: The EUR/USD is currently trading at 1.2768 levels. The Euro breached its one week high against the US dollar yesterday, after the French and Germany posted 0.2% growth in the quarterly GDP. The Euro started gaining after the after the minutes of the Federal Reserve's October meeting showed a number of Fed officials voted for additional asset purchases next year when the Fed's Operation Twist program expires. Today’s current account and trade data from Europe will be closely watched by the market participants. Support is at 1.2630 levels, and the resistance is near 1.3000 levels.
GBP/USD: The Pound is trading at 1.5859 levels. The Pound is weakening against the US dollar and is trading below its two month low. The weakness in the Pound was mainly attributed to the retail sales, which dropped by -0.8% versus 0.5% in the last month. The fall was the sharpest decline since April and raised the possibility that UK GDP may contract once again in Q4 of this year. Adding to this, the governor of the UK said that the economy might enter the contraction in the fourth quarter, which further dampened the sentiments. Support is near 1.5750 levels and the resistance is near 1.6017 levels. Overall in a range with bearish bias.
USD/JPY: USD/JPY is weakening and currently trading at 81.14 levels. The yen is trading below its six month low against the US dollar. Since last couple of days, we have been closely watching the movements of Yen, which is driven down by the upcoming elections in Japan. There are increasing speculations that the opposition party will take power in the next month and it will push the central bank to expand monetary easing. This will further depreciate the Yen against the US dollar. Near term support is at 80.60 levels andthe near term resistance is at 81.80 levels. Maintaining target of 84.00
AUD/USD: Australian dollar is trading at 1.0332 levels. The AUD is trading below its two week low against the US dollar as risk appetite faded after stocks declined globally due to mounting geopolitical tension on the Gaza strip and signs of economic slowdown worldwide. Near term support is seen at 1.0250 levels while immediate resistance is at 1.0560 levels.
Gold: Gold is trading at $1713 levels. The gold prices fell yesterday amid economic uncertainties over US fiscal cliff . The Euro zone debt crisis dragged the economy into its second recession since 2009 in the third quarter despite modest growth in Germany and France, which further weighed on the gold prices. Near term support is at $1706 levels,whereas strong resistance can be seen near $1728 levels.
Oil: WTI Crude is trading at $85.88 levels. Crude oil prices are trading on flat note on concerns over a growing inventory surplus, which hit a three-year high last week. The crude prices are also driven down due to rising Middle East tensions after Israel killed a leader of Hamas in a rocket attack in Gaza. Support is at $82.10 levels, whereas strong resistance can be seen near the $89.00 level.
DI: Dollar index is trading at 81.05 levels. The dollar index is trading flat against its majors. Yesterday it breached the level of 81.00 and made a low of 80.93 after the economy witnessed a couple of poor data. The US unemployment claims rose to 439k from 361k in the last week. In the meanwhile, the Fed Chairman Bernanke said they will take necessary steps to boost the housing sector of the economy. Strong near term support is seen near 78.90 levels and the resistance is at 81.80 levels.
(Source: Corporate Communications Team, India Forex Advisors Pvt. Ltd.)