March 16, Indian Rupee

Transcription

1 Indian Rupee March 16, 2009 The Indian rupee was extremely sideways and traded in the narrow range of to and settled the week at levels. The Indian rupee appreciated by 0.39% against the buck from the previous weeks close. Market was almost stable as two sessions were off due to local holiday. The rupee showed a tad strength in the last week as the local share market gained by around 5.22% from the previous weeks lower close. The India s sensitive Index closed the week at 8756 levels. Moreover, India s rupee strengthened on speculation global stock gains will encourage investors to increase purchases of emerging-market assets. Nevertheless, few domestic factors also supported the rupee to trade higher against green back as the weekly WPI inflation slowed to the lowest in more than six years as commodity and energy prices dropped amid the global recession. Wholesale prices climbed 2.43 percent in the week to Feb.28 from a year earlier after gaining 3.03 percent the previous week. Apart from the attractive inflation figure, M-3 money supply in India grew 19.6 percent in the two weeks ended Feb. 27 from a year earlier, compared with 19.9 percent in the prior two weeks. M3, which mainly comprises currency in public circulation, bank deposits and money invested in other saving plans, stood at 6.4 trillion rupees ($901 billion) on Feb. 27. Hence more of money supply erased the demand of dollar from the domestic market. From the forward market perspective, the offshore rupee declined a bit suggesting the spot rupee might appreciate a tad in the near future. In the other hand, India posted its first on the trot decline in industrial production in 16 years, suggesting tax cuts and lower interest rates are yet to revive demand in an economy faced with the worst slowdown since Looking into the above factors, we interpret; Indian rupee is likely to trade sideways and may appreciate against the greenback for the week ahead. USD/INR: The currency pair traded in the range of to with settling the week at levels. Market ended with a Doji pattern in the weekly chart, signals an indecisive behavior for the market. Now, the immediate supports can be seen at which is the previous week s low. Likewise, on the higher side the resistance can be seen at (life time high). Only on break of the same market is expected to move up towards levels. Since market is continuously moving higher and the momentum of the market establish further upward movement. However, the momentum indicator weekly RSI-14 is treading at 0.71, signaling a tad risky move at this juncture as the prices might take some correction. If market fails to breach levels, then we may expect the currency pair trade lower.

2 EUR/USD Spot euro surged by 2.17% to $ this week as global equities rallied, reducing the appeal of U.S dollar as a haven. The pair traded in the range of $ $ levels with major triggers being the sharply higher equity markets and possible Chinese stimulus measure. The dollar weakened against most of the major currencies as global stocks rallied after a Citigroup Inc. said that the bank is having the best quarter since 2007, reducing demand for the greenback. Further on, with speculation growing that European Central Bank will slow the pace of interest-rate cuts helped the euro to remain higher against its counterpart US dollar. During the week, Dow Jones moved higher by 9.01% while European FTSE market recorded gains of 6.31%. Week ahead, euro is expected to trade sideways against the dollar. Expected reduction in lending rates by FOMC and weak economic data is likely to enhance the haven demand for dollar. Nevertheless the rising equity markets will limit gains for dollar. The currency pair traded sharply higher and after making a high of $ it settled at $ levels. The weekly closing of the candle stick pattern suggests market to trade higher in the coming sessions. The next immediate resistances can be seen at $ levels. Only on break of the same may see market advancing to $ range which is also the 20-weeks EMA n the weekly chart. Likewise, the momentum indicator weekly RSI-14, is showing a slight upward movement and currently trading around 0.40, suggesting prices to move higher in the near term. Likewise, the supports can be seen at $ levels. IF market sustains above the support levels we may expect euro to move up to the resistances levels. Moreover, in the weekly chart, a double bottom pattern is likely to form and if it happens then we may see a good reversal (to higher) for the currency in the medium term. We expect the currency pair (euro/usd) is likely to trade higher in the coming sessions.

3 GBP/USD British pound declined by 0.65% this week as weak economic outlook and the government measure to print money, reduced the attractiveness of currency. The sterling fell as performance from housing, manufacturing and corporate remained bad. Reports showed Britain s housing sales slipped to the lowest level since at least 1978 and manufacturing shrank the most in four decades. According to the Royal Institution of Chartered Surveyors, the average number of transactions in a survey of real-estate agents and surveyors fell to 9.5 per respondent in the quarter through February, the least since the data began three decades ago. Further on, factory output dropped 2.9% in January from December and Manufacturing shrank 6.4% in the three months through January, the most since records began in Earlier in the week, the pound slid as Lloyds Banking Group Plc ceded control to the government in return for state-asset guarantees. Overall after trading in the range of $ $ levels, the cross ended this week at $ levels. Coming week, pound is expected to trade lower amid rising unemployment in U.K and weak economic data from U.S. The currency pair, cable traded down and after making a low of $ it ended at $ levels. Market is continuously trading sideways to lower for the past few weeks, suggesting the ongoing down trend to remain for the short run. The trend is still bearish as the short term averages are trading well above the price levels suggesting market to trade further down. Now, the immediate supports can be seen at the last week s low which is at $ levels. Likewise, on the higher side the resistances can be seen at $ levels. The momentum indicator weekly RSI-14 is treading flat 0.35 levels. We expect the currency pair to trade sideways for the week ahead.

4 USD/JPY Japanese yen traded volatile last week with higher global stocks and speculation on deepening recession carrying the mixed sentiment in the market. The week started with losses for the currency as Japan posted its first current-account deficit in 13 years in January after exports collapsed amid the global recession. This was then followed by higher equity markets and contraction in Japanese economy growth at the fastest pace since Japan s gross domestic product shrank an annualized 12.1% in the three months ended Dec. 31, less than the 12.7% reported last month. The bad news wasn t ending here as factory output and overseas shipments plunged by records in January and Toyota Motor Corp., Japan s biggest automaker, said that it will cut production by more than half this quarter. Further on, real-estate company Pacific Holdings Co. filed for bankruptcy this week, becoming the 12th publicly traded firm to fail this year. Nevertheless losses were restricted the currency managed to close higher as Chinese exports plunged, German industrial production declined and Japanese Prime Minister Taro Aso ordered a third spending plan, aimed at easing a recession that may be the nation s worst since World War II. This week, Japanese yen is likely to be sideways to higher amid additional spending plans by Japan and weak data enhancing the appeal of the currency. The currency pair traded extremely sideways and moved in the range of to with settling the week at levels. Market is expected to trade sideways, as for the past three weeks market is trading below the 50- weeks EMA. However, the market is expected to remain sideways and breach of last weeks high would confirm further up trend. The next resistance can be seen at levels. Likewise, on the lower side the supports can be seen at levels. We expect Yen to trade sideways for the week ahead.

5 WEEKLY QUOTES Majors EUR/USD GBP/USD CHF/USD USD/JPY AUD/USD CAD/USD Asia Pacific USD/INR USD/SGD USD/HKD USD/NZD USD/THB USD/IDR USD/KRW USD/TWD Latin American USD/MXN USD/VEB USD/CLP USD/BRL USD/ARS USD/COP USD/UYU European USD/KKK USD/NOK USD/SEK USD/ISK USD/RUB USD/CZK USD/PLN Africa USD/ZAR USD/EGP USD/KES USD/MUR USD/NGN USD/SDD

6 Upcoming Economic Events Date Time Region Event Period Survey Prior 03/16/ :31 UK Rightmove House Prices (MoM) MAR % 03/16/ :30 EC Euro-Zone CPI (MoM) FEB 0.40% -0.80% 03/16/ :30 EC Eurozone Employment (QoQ) 4Q % 03/16/ :00 US Empire Manufacturing MAR /16/ :30 US Net Long-term TIC Flows JAN $45.0B $34.8B 03/16/ :45 US Industrial Production FEB -1.30% -1.80% 03/16/ :30 US NAHB Housing Market Index MAR /17/ :20 JN Tertiary Industry Index (MoM) JAN -0.50% -1.60% 03/17/ :30 JN Machine Tool Orders (YoY) FEB F % 03/17/ :00 UK DCLG UK House Prices (YoY) JAN % % 03/17/ :30 EC ZEW Survey (Econ. Sentiment) MAR /17/ :00 US Producer Price Index (MoM) FEB 0.40% 0.80% 03/17/ :00 US Producer Price Index (YoY) FEB -1.40% -1.00% 03/17/ :00 US Housing Starts FEB 450K 466K 03/17/ :00 US Building Permits FEB 500K 531K 03/18/2009 JN BOJ Target Rate 18-Mar 0.10% 0.10% 03/18/ :30 JN BOJ Monthly Report 17-Mar 03/18/ :30 JN Leading Index CI JAN F /18/ :00 UK Bank of England Minutes 18-Mar 03/18/ :00 UK Claimant Count Rate FEB 4.00% 3.80% 03/18/ :00 UK ILO Unemployment Rate (3mths) JAN 6.50% 6.30% 03/18/ :00 US Consumer Price Index (MoM) FEB 0.30% 0.30% 03/18/ :00 US Current Account Balance 4Q -$137.4B /18/ :45 US FOMC Rate Decision 19-Mar 0.25% 0.25% 03/19/ :00 JN Nationwide Dept. Sales (YoY) FEB % 03/19/ :00 IN Wholesale Price Index YoY 7-Mar % 03/19/ :00 US Initial Jobless Claims 15-Mar 659K 654K 03/19/ :30 US Leading Indicators FEB -0.60% 0.40% 03/19/ :30 US Philadelphia Fed. MAR /20/ :30 EC Euro-Zone Ind. Prod. sa (MoM) JAN -4.00% -2.60%

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