DAILY MARKET REPORT: TUESDAY - January 8, 2013

The Indian Rupee opened at 55.15 Levels after closing yesterday at 55.22 levels. The Intraday range for the rupee is seen between 54.90 - 55.25 Levels.

Weeks ahead of the third quarter review of monetary policy, RBI said yesterday that it will look at the current macroeconomic situation besides inflation before taking a call on reducing interest rates.

The Reserve Bank of India (RBI) has relaxed overseas borrowing limits for infrastructure finance companies.The infrastructure finance companies will no longer need to seek approval of RBI for raising funds overseas equivalent to up to 75% of their owned funds. The RBI has also relaxed the hedging requirement for currency risk for these companies to 75% of the exposure, from an earlier limit of 100%.

The Asian markets are trading lower as investors are caution ahead of the European Central Bank's policy meeting later on Thursday.

The main focus of the markets will be on the speeches from Federal Reserve Presidents which starts from today. The confusion created by the FOMC minutes makes this week's comments from Fed Presidents extremely important because investors want to know how serious the central bank is about phasing out QE.

The upward revision to the unemployment rate eased some concerns, if job growth continues at a steady pace, the Federal Reserve could be compelled to end asset purchases this year.

The US 10 year treasury yield is trading at 1.89%. The Indian 10-year bonds rose, pushing the yield to a two-year low on speculation that the central bank will reduce interest rates this quarter to boost growth. The 10 year bond yield closed down at 7.90%.

Outlook: Importers were asked to cover at 54.20 - 54.40 levels, who missed the levels should cover on dips around 54.70 - 54.80 levels. The Exporters should wait for better levels to sell, as we have already covered partially around 55 plus levels. Overall view: USDINR Bullish

EURUSD: The Euro is currently trading at 1.3130 levels. The economic data released yesterday showed improvement in investor confidence wherein the producer price index came in a little negative at -0.2%. The European Central Bank's monetary policy meeting is due on Thursday which will be keenly eyed by the investors. Support is seen at 1.2950 levels while resistance is seen at 1.3119 levels.

GBP/USD: The Pound is trading at 1.6109 levels against the US Dollar. The Pound is trading stable against the dollar in the absence of any major economic data releases. The only data released was Halifax HPI, according to which, house prices rose 1.3% in December, which was much stronger than anticipated. Going ahead, this week's monetary policy statement will be closely watched by the markets. The pair is expected to find a support near 1.5961 levels and the resistance is near 1.6250 levels. Overall in a range with bearish bias.

USD/JPY: The Yen is trading slightly stronger at 87.85 against the US Dollar. Near term support is at 86.50 levels and the near term resistance is at 89.00 levels. Target of 84-85 levels achieved and further target it to 90 levels.

AUD/USD: Australian dollar is trading weaker at 1.0490 levels against the US Dollar. The AUD is trading flat on account of mixed economic reports released yesterday. The AIG Construction Index rose to 38.8 from 37.00 in the last month, but it is still in the contraction territory. The report showed that the house building activity declined at its steepest rate in three months to December amid weaker new orders. The trade data showed that Australia's imports outpaced exports by A$2.64 billion ($2.77 billion) in November, the biggest trade shortfall since March 2008, from a revised A$2.44 billion deficit the prior month, The Near term support is seen at 1.0290 levels while immediate resistance is at 1.0588 levels.

Gold: The gold is trading at $1650 level. The pair is expected to find support at $1640 levels and resistance at $1675 levels.

Oil: The WTI Crude is trading at $93.27 levels. The crude prices are trading modestly higher taking cues from weak demand from the US. The United States is the world's biggest oil consuming nation and the health of its economy is a key influence on crude prices. The pair is expected to find support at $89.95 levels and resistance at $93.75 levels. Overall range bound.

DI: The Dollar is trading above its one month high at 80.16 levels. The US dollar index is trading slightly lower in the absence of economic data and ahead of the speeches by the Fed members. The market will be waiting for Thursday when some of the FOMC members will be commenting on the economic outlook of US and also about QE3. No major data is due for release today. Strong near term support is seen at 79.60 levels and the resistance is seen at 81.45 levels. Overall the Dollar Index is bullish.

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