Currencies Daily Report

Transcription

1 Currencies Daily Report Friday 02 Jun 2017 Market Overview Asian shares were mostly higher today with attention on U.S. jobs data later in the day. Overnight, U.S. stocks made a winning start to the month yesterday, as investors look ahead to the release of the monthly jobs report, after the pace of private sector jobs growth surged in May while manufacturing activity topped market expectations. U.S. crude fell in Asia today after President Donald Trump abandoned a 2015 pact between 195 nations to tackle climate change and due to ongoing concerns over a global glut in crude supply despite a bigger-than-expected draw in U.S. crude inventories. The Dollar index holds the 97 handle to trade at but lacks meaninful rise by U.S. yields where the treasuries appear to be bound by thoughts that the Fed will limit its monetary tightening after it hikes rates in June. The Rupee opened strong at taking cues from the positive asian markets, with expectations of moving out of the range towards U.S. Employment Preview: May employment data is out later today and some expect a 195k (median 182k) headline from 211k in April and 79k in March and the unemployment rate to hold steady at 4.4% for a second month, down from 4.5% in March. There are still significant upside risks to employment despite the slight cool down in some indicators. Trade Deficit Preview: The April trade data too is out today and some expect to see a 7.5% expansion in the deficit to -$47.0 bln (median -$45.8 bln) from -$43.7 bln in March and -$43.8 bln in February. Exports are expected to edge up by 0.2% on the month following a 0.9% dip in March and imports should climb 1.5% after a 0.7% decline in March. ECB Focus Remains on Inflation Not Growth Despite the confusion over Draghi's dovish comments at the start of the week, central bankers seem to agree that the recovery is looking increasingly strong and balanced. But while the ECB is likely to up its assessment on the growth outlook at next week's meeting, headline inflation fell back to just 1.4% this month and updated set of inflation projections could likely to be scaled back, as oil prices are lower than anticipated in March and the EUR stronger. We still expect the easing bias to be removed next week, however, ECB heavyweights remain reluctant to commit to exit steps just yet. Indices Last Close Previous Close % CHANGE NASDAQ DOW JONES NIKKEI HANGSENG Currencies Today Morning Yesterday at 05:00 PM % CHANGE DXY EURUSD GBPUSD USDJPY Today Morning Yesterday at 05:00 PM % CHANGE USDINR Spot IRF

2 USDINR Intraday Outlook US dollar is trading at 97.17, rebounding from the levels of in yesterday s session. US dollar after being sold off in Wednesday s session to a seven week s low has recovered from those lower levels boosted by better than expected ADP Nonfarm Employment changes, which were reported at 253k over an expectation of 185K. This better than expected ADP figures has given a boost to US dollar against basket of 6-currencies. Adding to that, ISM Manufacturing PMI for the month of May has also given a boost, as it was printed at 54.9 where markets expected it to be reported at These better than expected has helped US dollar to make a high of 97.26, but later the same high s has being capped as the Weekly jobless claims were reported higher since past 5 weeks. This miss of expectations has capped further gains and lead to some profit booking. Looking ahead today we have Nonfarm Payrolls and Unemployment Rate for the month of May due to be published later this evening, this figure will closely watched by market participants as this will help them to shape expectations for FOMC interest rate decision on 14th June. This is the daily chart of USDINR pair, during the last trading day the pair opened made a low of 64.61and trading in a narrow range for the day, the pair has been on a broader range of on the downside and on the upside (spot), and now likely to open near if sustain below then can expect lower levels in the pair for the day with acting as a major support. Bearish SELL USDINR FUT TGT SL S3 S2 S1 Pivot R1 (Futures) R R Exporters Strategy Importers Strategy June exports partially hedged at ( ) June imports to be kept open, targeting for partial hedging

3 EURINR Intraday Outlook Euro is trading at , after making a high of US dollar which has been boosted by better than expected ADP reported has weighed on the euro, and led to make a low of in yesterday s session. Manufacturing PMI for May was confirmed at 57.0, as expected. The rise from 56.7 in April confirms that manufacturing sector activity accelerated again in May. National readings showed the German number revised up slightly, Coming to the policy front, ECB s monetary policy scheduled next wee, and market participants expect the ECB to remove its easing bias at next week's meeting, a euro supportive development, though with the council seemingly reluctant to commit to exit steps, EUR-USD upside may be limited, especially given the odds for a June Fed rate hike are back at about 90%. Looking ahead today we have Nonfarm Payrolls and Unemployment Rate for the month of May due to be published later this evening. This is the daily chart of EURUSD, the pair opened at and made a high of and was consolidating with selling pressure near levels the pair had continued its medium term up trend of higher low and higher top, and yesterday saw some profit booking expects the pair to trade in the range of on the higher side and on the lower side. Sideways SELL EURUSD TGT SL SELL EURINR FUT TGT SL S3 S2 S1 Pivot R1 R2 R3 (Futures) Exporters Strategy Exports to be left open targeting 73 Importers Strategy Imports partially hedged at ( )

4 GBPINR Intraday Outlook Pound is trading at , after making a high of There was no major reason for Pound s appreciation in the first half of the session the move was just technical. The UK May manufacturing PMI beat expectations at 56.7, above the expectations of 56.5, Job growth was the highest since While the headline showed moderation, the survey still indicates that the sector continues to expand robustly, benefitting from the tonic of a weaker pound since the Brexit vote of last year and a good European and global growth backdrop. Much attention will be on the services PMI, due out next Monday, with the key sector having driven GDP growth to just 0.2% q/q in Q1 from 0.7% in the previous quarter. Looking ahead today we have UK s Construction PMI to be reported this afternoon and this is expected to be reported at 52.7 This is the daily chart of GBPUSD, during the last trading day the pair after opening at made a high and was trading violating in a narrow range throughout the day, the pair had a steep fall from levels and made a low of few days back and found some support and reversed, now will act as a major support while strong resistance comes at 1.30 levels and the pair likely to trade in the broader range for the next week. Bullish BUY GBPUSD TGT SL BUY GBPINR FUT TGT SL S3 S2 S1 Pivot R1 R2 R3 (Futures) Exporters Strategy Exports to be partially hedged targeting Importers Strategy Imports to be partially hedged targeting 83

5 JPYINR Intraday Outlook USD-JPY is trading at , after making a low of Better than expected U.S.ADP data has given a boost to US dollar to trade higher against basket of 6 major currencies. ADP Nonfarm Employment changes, which were reported at 253k over an expectation of 185K. Adding to that, ISM Manufacturing PMI for the month of May has also given a boost, as it was printed at 54.9 where markets expected it to be reported at The risk backdrop remains mildly supportive, though decent incoming Japanese data and the background noise of North Korea should keep the yen largely supported for the time being. Looking ahead today we have Nonfarm Payrolls and Unemployment Rate for the month of May due to be published later this evening, this figure will closely watched by market participants as this will help them to shape expectations for FOMC interest rate decision on 14th June. The USDJPY Daily chart, the pair opened at and made a low of and was trading with a positive bias the pair violated the resistance of 111 and had strong session after trading narrow range for many days the range has been 110 on the downside and 112 on the upside expects same trend to continue with bearish cypher at can expects some supply at the mentioned levels. Bullish Sell USDJPY TGT SL BUY JPYINR FUT TGT SL S3 S2 S1 Pivot R1 R2 R3 (Futures) Exporters Strategy June Exports to be partially hedged targeting Importers Strategy June Imports to be hedged partially at ( )

6 Economic Data for the Day Time Currency Data Forecast Previous Spanish Unemployment Change Construction PMI Average Hourly Earnings m/m Non-Farm Employment Change Unemployment Rate Trade Balance 12:30pm EUR K K 2:00pm GBP :00pm USD 0.2% 0.3% USD 181K 211K USD 4.4% 4.4% USD -45.5B -43.7B Report prepared by: Siddhesh Ghare Deepak Agarwal Shashank Damaraju Disclaimer: The information and views presented in this report are prepared by Karvy Stock Broking Limited. The information contained herein is based on our analysis and up on sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor any person connected with any associated companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned companies from time to time. Every employee of Karvy and its associated companies are required to disclose their individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Stock Broking Ltd.