Daily Market Report: Monday - November 12, 2012

The Indian Rupee opened at 54.68 levels after closing at 54.75 levels on Friday. The Intraday range for the rupee is seen between 54.50-54.85 levels.

The Indian Rupee fell week on week on the back of dollar strength. The USD index rose by 0.6% week on week. The USD/INR is likely to stay range bound to weak in a holiday shortened week.

The investors will be eying Consumer Price Inflation (CPI) and Index of Industrial production data today (November 12, 2012). The wholesale price index (WPI) for October 2012 is expected to be released on Wednesday, (November 14, 2012).

The Asian market is trading lower as investor sentiment was weighed down by concerns over U.S. fiscal woes as well as Greece's bailout, despite improving economic data from the world's two largest economies, the United States and China. The China elects a new leader this month and the elected leader faces an economy that is going downhill on domestic and global issues.

The Japan's economy shrank 0.9% in July-September from the previous quarter, as forecast. It was the first contraction in three quarters, suggesting faltering global demand and weak consumer spending may push the economy into a mild recession.

Looking at the Euro, the forecast for a bailout for Greece remained unclear even after Greece on Sunday won a parliamentary approval for the 2013 budget law. The Euro zone finance ministers were unlikely to release a new tranche of loans to Greece at their meeting on Monday given no agreement yet on how making its debt sustainable.

Checking out the Liquidity in Indian market, it eased marginally last week with bids for repo in the LAF (Liquidity Adjustment Facility) averaging Rs 67,000 crores on a daily basis against an average of Rs 75,000 crores seen in the week before last. The Liquidity eased on the back of Rs 17,500 crores being released into the system as the CRR cut of 25bps took effect. The government auctioned Rs 13,000 crores of bonds last week. The government is scheduled to auction Rs 13,000 crores of bonds this week.

Outlook: Exporters have sold above 54.60-70 partially , and again sell 54.65 plus levels only for long term partially (8-12 months only). The rupee is expected to be weak with some dips in between . Uncovered Importers were recommended to cover close to 54.25-30 levels again . Overall USD/INR pair remains in a bullish trend.

EURUSD: The EUR/USD is currently trading lower at 1.2724 levels. The Euro is trading near its two month low against the US dollar ahead of the Euro Group meeting to be held today. The members are likely to discuss about the Greece situation. The more the country is delaying the bailout decisions, the more uncertainty is prevailing in the market and is further weighed on the Euro. Last week, Samaras secured the vote on Greece's 2013 budget with 167 lawmakers, setting up the next tranche of an international bailout. Support is at 1.2630 levels, and the resistance is near 1.3000 levels.

GBP/USD: The Pound is trading at 1.5990 levels. It is trading near its two month low against the US dollar. The pound started trading lower after Britain's finance ministry said it would use revenue from the Bank of England bond-buying program to reduce short-term debt issuance. This indicates that they are concerned about the UK outlook for growth which subsequently could undermine sterling sentiment. Support is near 1.5910 levels and the resistance is near 1.6216 levels. Overall in a range with bearish bias.

USD/JPY: JPY is currently trading at 79.47 levels. The Yen is trading flat against the US dollar but the economic data from Japan points towards Yen's weakness. Gross domestic product fell an annualized 3.5 percent in the three months through September, after a revised 0.3 percent gain the previous quarter. The data showed that the economy contracted at a faster pace since last year's earthquake as exports slumped and consumer spending slid. Near term support is at 79. 00 levels and the near term resistance is at 81.80 levels.

AUD/USD: Australian dollar is trading at 1.0417 levels. The AUD is trading higher and reversed its earlier losses after bigger-than-estimated trade surplus in China brightened prospects for commodity exports and the data which showed Australian home-loan approvals rose for a second month. China's exports exceeded imports by $32 billion in October, compared to a $27.3 billion trade surplus. Near term support is seen at .0250 levels while immediate resistance is at 1.0560 levels.

Gold: Gold is trading at $1733.52 levels. The current US fiscal cliff is making the gold prices to move higher. They are trading near three week high. Near term support is at $1727 levels, whereas strong resistance can be seen near $1750 levels.

Oil: WTI Crude is trading at $86.00 levels. The crude prices are trading slightly higher as China's trade surplus boosted the positive sentiments in the markets thereby supporting the demand for the Crude. Support is at $82.10 levels, whereas strong resistance can be seen near the $89.00 level.

DI: Dollar index is trading at 80.98 levels. The US dollar is trading at stable levels near 81.00 as the concerns over the US fiscal cliff triggered risk aversion in the market. Last week's economic data from the US came out better than expected which further supported the dollar index on the upside. The consumer sentiment index rose to 84.9 from 82.6 in the last month, indicating increasing optimism among the consumers. 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.)