MORNING COFFEE 6-JUNE-2017 FROM CEO'S DESK CURRENCY USDINR

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1 6-JUNE-2017 FROM CEO'S DESK The US dollar fell to seven-week low and US 10 year yield hovers around 7-month low after weaker services PMI and ISM-manufacturing PMI. Yesterday, Indian equities had extended its gains and rupee remained stronger on inflows and positive monsoon sentiment. However, rupee is likely to remain flat ahead of RBI monetary policy decision which is due on Wednesday. RBI unlikely to move their policy rates this time as lower inflation and excess liquidity in banking system is already doing good job. The intraday range for rupee would be RBA kept their cash rate steady at 1.5% for a ninth straight month amid renewed fears over a growing consumer spending strike. However, the market-implied chance of another interest rate cut by year end rose to about 17 per cent after disappointing economic data in the past month. Euro took resistance near as traders doubted that any ECB shift in policy stance could strengthen the euro further. But Sterling rose to its highest in ten days, with investors taking comfort from an opinion poll that gave Britain's ruling Conservative Party a comfortable lead ahead of election. The risk off sentiment led to demand for safe haven like yen as caution mounted ahead of Britain's election, ECB meeting, and former FBI Director James Comey's testimony. CURRENCY USDINR EURUSD GBPUSD USDJPY COMMENTS The Indian rupee was little changed against the dollar, as investors await outcome of the monetary policy decision, due tomorrow.it is expected to maintain status quo on rates. Euro fell as U.S. dollar rebounded from a near seven-month low as traders doubted that any ECB shift in policy stance could strengthen the euro further Sterling rose to its highest in ten days, with investors taking comfort from an opinion poll that gave Britain's ruling Conservative Party a comfortable lead ahead of election The dollar hit a six-week low against the safe-haven yen as caution mounted ahead of Britain's election, a ECB meeting, and former FBI Director James Comey's testimony INTRADAY OUTLOOK BEARISH BULLISH BULLISH BEARISH COMMODITIES/DI GOLD SILVER WTI CRUDE DOLLAR INDEX INFLOWS ( ) FII DII * Figures are in Rs. Crores LAST CHANGE % CHANGE REGION GLOBAL INDICES LAST CHANGE % CHANGE $1, % HANG SENG % $ % ASIA KOSPI % $ % NIKKEI % % SENSEX % INDIA NIFTY % BUY SELL NET CAC % EUROPEAN DAX % FTSE % US DOW % NASDAQ %

2 COUNTRY TIME MAJOR GLOBAL EVENT ACTUAL FORECAST PREVIOUS IMPACT ON FX 5/6/2017 GBP 2:00 PM SERVICES PMI BEARISH USD 7:30 PM ISM NON MANUFACTURING PMI BEARISH AUD 10:00 AM RBA RATE STATEMENT 1.5% 1.5% CENTRAL BANKS INTEREST RATES LIBOR RATES ON 1M 3M 6M 1Y CENTRAL BANK RATES NEXT MEETING USD RBI 6.25% June 6, 2017 EUR FED 1.00% June 14, 2017 GBP ECB 0.00% June 8, 2017 JPY BOE BOJ RBA 0.25% -0.10% 1.50% June 15, 2017 June 16, 2017 June 6, 2017 INDIA'S KEY RATES 10 YEAR CARRY LAST CHANGE AGAINST USD REPO RATE 6.25% REVERSE REPO 6.00% BOND YIELD TRADE INFLATION 2.99% CRR 4.00% INDIA 6.64% 0.02 INR 5.00% GDP (Q/Q) 6.10% SLR 20.50% US 2.16% 0.00 EUR 1.00% GBP 0.75% JPY -1.10% MONTH END FORWARD PREMIUM- IN RUPEES (BID RATE) MONTH 1M 2M 3M 6M 1Y 2Y 3Y 4Y 5Y 10Y USDINR EURINR GBPINR JPYINR

3 OTHER MAJOR GLOBAL NEWS * RBA held rates at 1.5% & statement has no significant changes * Dollar fell to 7-month low after weaker-than-expected services PMI and ISM non-manufacturing PMI * Arab nations cut ties with Qatar in new Mideast crisis CHART OF THE DAY - USDJPY SPOT RATE TECHNICAL OBSERVATION The USDJPY pair has breached its previous low of levels and now making new lower low. The downtrend channel and Bollinger band suggests bearish trend. It is expected to fall further till levels. INTRADAY RANGE [NEGATIVE BIAS] CURRENCY 3 MONTHS OUTLOOK 6 MONTHS OUTLOOK RANGE OUTLOOK RANGE OUTLOOK $ INDEX BULLISH BULLISH EURUSD BEARISH BEARISH GBPUSD BEARISH BEARISH JPYUSD BULLISH BULLISH AUDUSD BEARISH BEARISH USDCAD BULLISH BULLISH

4 CURRENCY DAILY TECHNICAL CHART

5 INTEREST RATE DIFFERENTIAL CHARTS (VS US DOLLAR)

6 CURRENCY OPTION STRATEGY RECOMMENDED ON:- 26/05/2017 FORWARD RATE: (WHEN RECOMMENDED) STRATEGY FOR: IMPORTER SPOT RATE: (WHEN RECOMMENDED) STRATEGY We suggest a seagull strategy for June expiry. We recommend buying one call option of strike, selling one call option of strike along with selling put option of strike with a net outflow of 5 paise. This strategy is suitable for those impoters who want to hedge on the upper side (Better than forward rate) while simultaneously participating on the downside JUN '16 EXPIRY PREMIUM PAYOFF TABLE BUY PAID BUY NET RATE SELL 0.15 RECEIVED IF RATE ON SELL CALL SELL PUT FOR SELL 0.10 RECEIVED EXPIRY NET PAYOFF IMPORTER NET PREMIUM PAID PAYOFF CHART Market Price Net rate for importer 61

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