Nivesh Monthly Dollar/Rupee Outlook

Transcription

1 Nivesh Monthly Dollar/Rupee Outlook 3 January, 2018 Currency LTP Chg% MoM Chg % Yoy USDINR EURINR GBPINR JPYINR DX EURUSD GBPUSD USDJPY USDCNY Dollar Set For Worst Performance Since was the worst year for the U.S. Dollar Index as it plunged more than 10% and settled below levels. It was the biggest yearly fall since It made yearly high of levels (3 January 2017) and settled at levels. The last time it faced such difficult times was in 2003 when it lost 14.6% of its value on yearly basis. The monetary policy of US Federal Reserve was the most aggressive among all central banks last year. It raised interest rates by 75 basis point under the backdrop of stronger growth and lower unemployment. US economy grew at a 3.3% annualized rate, strongest growth since Q and the unemployment rate touched 4.1%, the lowest since For most of the year, President Trump struggled to advance his economic agenda. This along with a host of other factors including rattling between the U.S. and North Korea hurt the confidence of global investors who moved away from the dollar in Looking ahead to 2018, the US Federal Reserve could be the most hawkish central bank compared to ECB, BOE, and BOJ. Further, Fed chair election will remain in focus in start of the Ultra-low unemployment, tax cuts, consumer and business rising confidence will lead to faster growth in the coming year. All of this is expected to drive inflation and growth higher in US, leading to a recovery of the greenback in Seema Yadav Research Analyst Tel: seema.yadav@indianivesh.in India rupee (INR) has outperformed against the dollar, in addition to global peers. Domestic factors like strong political mandate for BJP in UP elections, passage of GST Bill and a hawkish RBI stance have boosted the rupee. Against the dollar, rupee has appreciated 4.90% in Looking ahead, Union budget , implication of GST, impact of higher crude oil prices on inflation and CAD will be important trigger for the rupee.

2 USD-INR January Future LTP Sell around 1 Target 2 Target Stop loss LTP: 2 January USD-INR witnessed 0.79% correction last month and settled at levels compared to previous month close of levels. As was expected the pair was near to the predicted levels. On the monthly chart, USD-INR has broken down its immediate support of levels and formed a long bearish candle stick. Further, as per the wave count drawn on the above chart it is showing a downward irregular correction wave which started from the peak of levels. This yet is creating probability of bearishness in USD-INR. Now, levels will act as a crucial support which is coinciding with 50% Fibonacci Retracement of its 1 August 2013 to 2 May 2014 fall. Below it the pair may test levels and below. On the other hand, levels will represent a test of resistance for the month and only a break above it could result in recovery rally towards to levels.

3 Key Indicators which Lifted Clutter in December 2017 Indicators (U.S) Actual Forecast Previous Non-Farm Employment Change 228K 198K 244K Unemployment Rate 4.10% 4.10% 4.10% CPI m/m 0.40% 0.40% 0.10% Core CPI m/m 0.10% 0.20% 0.20% Federal Funds Rate <1.50% <1.50% <1.25% Core Retail Sales m/m 1.00% 0.60% 0.40% Retail Sales m/m 0.80% 0.30% 0.50% Building Permits 1.30M 1.27M 1.32M Final GDP q/q 3.20% 3.30% 3.30% CB Consumer Confidence Indicators (Japan) Actual Forecast Previous Consumer Confidence Final GDP q/q 0.60% 0.40% 0.30% Revised Industrial Production m/m 0.50% 0.50% 0.50% Trade Balance 0.36T 0.27T 0.35T National Core CPI y/y 0.90% 0.80% 0.80% Tokyo Core CPI y/y 0.80% 0.70% 0.60% Unemployment Rate 2.70% 2.80% 2.80% Retail Sales y/y 2.20% 1.10% -0.20% BOJ Core CPI y/y 0.60% 0.50% 0.50% Indicators (China) Actual Forecast Previous Trade Balance 264B 238B 254B USD-Denominated Trade Balance 40.2B 34.9B 38.1B CPI y/y 1.70% 1.80% 1.90% PPI y/y 5.80% 5.80% 6.90% Industrial Production y/y 6.10% 6.10% 6.20% Fixed Asset Investment ytd/y 7.20% 7.20% 7.30% Foreign Direct Investment ytd/y 9.80% 1.90% Retail Sales y/y 10.20% 10.30% 10.00% Indicators (Euro zone ) Actual Forecast Previous German ZEW Economic Sentiment French Flash Manufacturing PMI French Flash Services PMI German Flash Manufacturing PMI German Flash Services PMI Flash Manufacturing PMI Flash Services PMI Final CPI y/y 1.50% 1.50% 1.50% German Ifo Business Climate Indicators (UK) Actual Forecast Previous Manufacturing PMI Construction PMI Services PMI Manufacturing Production m/m 0.10% 0.10% 0.70% CPI y/y 3.10% 3.00% 3.00% Average Earnings Index 3m/y 2.50% 2.50% 2.30% Unemployment Rate 4.30% 4.20% 4.30% Retail Sales m/m 1.10% 0.40% 0.50% Current Account -22.8B -21.5B -25.8B Final GDP q/q 0.40% 0.40% 0.40% Indicators (India) Actual Forecast Previous Index of Industrial Production 2.2% - 3.8% Wholesale price-based inflation oct 3.93% % Current account deficit $7.2 billion - $15.0 billion Fiscal Deficit CPI based inflation October 4.88% % Forexfactory.com, tickernews, investing.com.

4 Key Economic Data and Events to Watch in January, 2018 India Will impact Rupee 12/01/18- -IIP (y/y chg) (Base =100) 15/01/18- WPI inflation 31/01/18 - Government Finances U.S. Will impact Dollar Index 04/01/18 - FOMC Meeting Minutes 05/01/18 - Non-Farm Employment Change, Unemployment Rate 12/01/18 - CPI m/m, Core CPI m/m 26/01/18 - Advance GDP q/q Europe Will impact EUR 05/01/18- CPI Flash Estimate y/y 25/01/18- ECB Minimum Bid Rate 31/01/18 - CPI Flash Estimate y/y U.K. Will impact GBP 03/01/18 - Construction PMI 10/01/18- Manufacturing Production m/m 16/01/18 - CPI y/y 26/01/18 - Prelim GDP q/q Japan Will impact JPY 09/01/18 - Consumer Confidence 18/01/18 - Revised Industrial Production m/m 23/01/18- Monetary Policy Statement, BOJ Policy Rate, BOJ Press Conference 30/01/18 - National Core CPI y/y China Will impact Yaun 10/01/18 - CPI y/y 12/0/18 - Trade Balance 19/01/18 - GDP q/y 19/01/18 - Industrial Production y/y Source: Forexfactory.com, ticker news, investing.com

5 IndiaNivesh Securities Limited SEBI Registration No.INH LodhaSupremus, 17th Floor, SenapatiBapat Marg, Lower Parel, Mumbai Tel (Board): Fax: Website: Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (IndiaNivesh), for use by the recipient as information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or published or made available to others, in whole or in part without prior permission from us. This document is not to be construed as an offer to sell or the solicitation of an offer to buy any currency pair. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. The information contained in this document has been obtained from sources that are considered as reliable though its accuracy or Completeness has not been verified by IndiaNivesh independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any responsibility or whatever nature for the information, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this material only. IndiaNivesh directors and its clients may have holdings in the currencies mentioned in the report.