Nivesh Monthly Dollar/Rupee Outlook

Transcription

1 Nivesh Monthly Dollar/Rupee Outlook 4 December, 2017 Currency LTP Chg. % USDINR EURINR GBPINR JPYINR DX EURUSD GBPUSD USDJPY USDCNY Seema Yadav Research Analyst Tel: seema.yadav@indianivesh.in Dollar witnessed biggest monthly drop after July 2017 Indian rupee remained somewhat strong against the dollar last month. The local currency received aggressive boost after Moody's upgraded India's sovereign credit ratings, for the first time in 13 years, a notch above investment grade, while Standard & Poor s kept its outlook on India stable at BBB /A 3 and lauded the Modi government's fiscal consolidation drive. From the economic front, CPI and WPI inflation in October remained higher than expected which dented hopes of a near term rate cut by the RBI and make somewhat hurdle to for the Rupee. Further, India fiscal deficit for the first six months of the fiscal (from April to October) widened to Rs 5.25 trillion as against Rs 4.23 trillion in the corresponding period of the last year which added weakness in month end. However, Indian economy expanded at 6.3% in the Jul Sep quarter compared to 5.7% growth recorded in the Apr Jun period, data from Ministry of Statistics and Programme Implementation showed. Dollar index lost more than 1.50% against its major peers and settled levels. it drop towards monthly low levels on an uncertainty regarding a Federal Reserve rate hike at December monetary policy after the minutes of the recent meeting showed doubts over inflation added recent bearish move in the dollar. Federal Reserve chair Janet Yellen cautioned that raising interest rates too quickly may risk stranding inflation below the US central bank's 2% target and said there had been "some hint" that expectations for future price increases may be drifting down. Further, uncertainty about US tax reforms after senate Republicans delayed voting on their tax bill as a setback forced them to patch up the plan only hours before a planned final vote added weakness in the dollar. However, greenback gained grounds against its major peers following European Central Bank monetary policy meet minutes, which showed extension of its quantitative easing programme and dismal Euro zone inflation data.

2 USD INR December Future LTP Sell below 1 Target 2 Target Stop loss LTP: 30 November USD INR Future retreated from the monthly high and drop towards before closing at levels. On the monthly chart, USDINR has been consolidating around levels since 24 September However, downside pressure was noted from every rise towards levels which appears to continue unless it gives either side break. Further, as per the wave count drawn on the above chart is showing a downward irregular correction wave which started from the peak of , which yet is creating probability bearishness in USDINR. Now, will act a crucial support which is coinciding with 50% Fibonacci Retracement of its 1 August May 2014 falls below it pair may test and below. On the other hand, will represent a test of massive resistance for the month which is coincide with September 2017 high and a break only above it could result in recovery rally towards levels.

3 Key Indicators which Lifted Clutter in November 2017 Indicators (U.S) Actual Forecast Previous ADP Non Farm Employment Change 235K 202K 110K ISM Manufacturing PMI Non Farm Employment Change 261K 312K 18K Unemployment Rate 4.10% 4.20% 4.20% ISM Non Manufacturing PMI CPI m/m 0.10% 0.10% 0.50% Core CPI m/m 0.20% 0.20% 0.10% Core Retail Sales m/m 0.10% 0.20% 1.20% Retail Sales m/m 0.20% 0.00% 1.90% Prelim GDP q/q 3.30% 3.30% 3.00% Indicators (Japan) Actual Forecast Previous Final Manufacturing PMI Consumer Confidence Bank Lending y/y 2.80% 3.00% 2.90% Core Machinery Orders m/m 8.10% 1.80% 3.40% Current Account 1.84T 2.05T 2.27T Prelim GDP q/q 0.30% 0.40% 0.60% Trade Balance 0.32T 0.21T 0.27T Flash Manufacturing PMI Retail Sales y/y 0.20% 0.10% 2.30% Indicators (China) Actual Forecast Previous Caixin Manufacturing PMI Caixin Services PMI Trade Balance 254B 275B 193B CPI y/y 1.90% 1.80% 1.60% Industrial Production y/y 6.20% 6.30% 6.60% Fixed Asset Investment ytd/y 7.30% 7.30% 7.50% Manufacturing PMI Indicators (Euro zone ) Actual Forecast Previous Flash GDP q/q 0.60% 0.60% 0.60% Final CPI y/y 1.40% 1.40% 1.40% Flash Manufacturing PMI Flash Services PMI German Ifo Business Climate German Prelim CPI m/m 0.30% 0.30% 0.00% Spanish Flash CPI y/y 1.60% 1.70% 1.60% CPI Flash Estimate y/y 1.50% 1.60% 1.40% Core CPI Flash Estimate y/y 0.90% 1.00% 0.90% Indicators (UK) Actual Forecast Previous Manufacturing PMI Construction PMI MPC Official Bank Rate Votes Official Bank Rate 0.50% 0.50% 0.25% Services PMI Manufacturing Production m/m 0.70% 0.30% 0.40% CPI y/y 3.00% 3.10% 3.00% Average Earnings Index 3m/y 2.20% 2.10% 2.30% Retail Sales m/m 0.30% 0.10% 0.70% Second Estimate GDP q/q 0.40% 0.40% 0.40% Forexfactory.com, tickernews, investing.com. Indicators (India) Actual Forecast Previous Index of Industrial Production 3.8% 4.46% Wholesale price based inflation oct 3.59% 2.60% Government Finances (Apr Oct) Rs 5.25 trln Rs 4.23trln Gross Domestic Product (Jul Sep qrt) 6.3% 5.7% CPI based inflation October 3.58% 3.28%

4 Key Economic Data and Events to Watch in December, 2017 India Will impact Rupee 6/12/17 RBI fifth bi monthly monetary policy statement /12/17 IIP (y/y chg) (Base =100) 14/12/17 WPI inflation 29/12/17 Government Finances U.S. Will impact Dollar Index 08/12/17 Non Farm Employment Change & Unemployment Rate 13/12/17 CPI m/m & Core CPI m/m 14/12/17 Federal Funds Rate & FOMC Press Conference 21/12/17 Final GDP q/q Europe Will impact EUR 04/12/17 Euro group Meetings 14/12/17 ECB Minimum Bid Rate 18/12/17 Final CPI y/y 29/12/17 Spanish Flash CPI y/y U.K. Will impact GBP 04/12/17 Construction PMI 08/12/17 Manufacturing Production m/m 12/12/17 CPI y/y 14/12/17 MPC Official Bank Rate Votes & BOE Official Bank Rate 22/12/17 Current Account Japan Will impact JPY 06/12/17 BOJ Core CPI y/y 08/12/17 Final GDP q/q 21/12/17 Monetary Policy Statement, BOJ Policy Rate, BOJ Press Conference China Will impact Yaun 08/12/17 Trade Balance 09/12/17 CPI y/y 14/12/17 Industrial Production y/y 31/12/17 Manufacturing PMI Source: Forexfactory.com, ticker news, investing.com

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