Currencies Daily Report

Transcription

1 Currencies Daily Report Wednesday 03 May 2017 Market Overview Wall Street edged higher on Tuesday as gains for the tech and industrial sectors countered weakness in auto and energy stocks and investors digested a heavy day of earnings reports. Asian stocks followed global indexes higher on Wednesday, as strong earnings and manufacturing data boosted risk appetite. FX trade was again quiet in N.Y. yesterday, with narrow ranges the rule. There was little in the way of data to drive the market, and traders now will largely hunker down into the FOMC announcement on Wednesday, and the U.S. jobs report on Friday. After a flat U.S. session yesterday the dollar drifted slightly higher in Asia ahead of the latest Fed views on interest rates due later in the day, with regional activity thin on holidays in several markets. The Rupee after closing marginally higher against the Dollar yesterday, opened a bit strong at and trade cautiously in the range of on spot. Fed Policy Outlook: No changes are expected from the FOMC on Wednesday, with the 0.75% to 1.00% rate band holding, and with no real update on the balance sheet. Policymakers are expected to leave the door open for another tightening next month, but won't presuppose the outcome. On the economic outlook, officials are likely to reiterate a moderate pace of expansion and will play down the weakness in Q1 as temporary. Indeed, markets are looking for growth to pick up to a 3.2% pace for Q2 GDP. The Fed is also expected to repeat that inflation is still moving toward the 2% target, even as today's March PCE price figures showed some slowing in the annual pace to 1.8% y/y from 2.1% y/y for the headline, and to 1.6% y/y from 1.8% y/y for the core. There's no press conference or release of updated economic and dot plot forecasts this time around. 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 The rupee gave up a strong opening to end only marginally higher against the US dollar yesterday due to persistent purchases of the greenback by importers. Earlier yesterday, the rupee had shown signs of strength a day after the dollar lost ground globally on the back of weak manufacturing and consumer spending data in the US. The rupee closed at a dollar, as against a dollar at close on Friday. Following trends in the Dollar against global currencies, The USDINR to is expected to trade cautiously ahead of the FOMC later today. Also, The rupee might trade strong against the US dollar today due to the greenback's overnight fall against other currencies after a series of weak April sales data by major US auto companies. Fall in new vehicle sales in the US followed Monday's data showing weak US factory activity and inflation, and last week's Jan-Mar gross domestic product growth, which added to market participants' worries that the Federal Reserve may take a more dovish view on interest rate increases. This is the daily chart of USDINR pair, during the last trading day the pair opened made a low of and saw the pair trading with sidewise to positive bias during the day, on indicator front RSI and price action signifies divergence, the pair has been trading in a narrow range in the range of and few days back and broke on the downside but could not sustain the lower levels and bounce strong resistance will come near spot and likely to find strong resistance there. Sideways Sell USDINR Fut SL TGT S3 S2 S1 Pivot R1 (Futures) R R Exporters Strategy Importers Strategy May Exports hedged at (Stop Levels) May imports partially hedged at 64.85/90 and 64.20/25

3 EURINR Intraday Outlook EUR-USD remains stuck in the middle of its one-week trading range, tracking a to band through the N.Y. session. Decent incoming EU data along with softer U.S. readings of late have supported the euro, while fallout from the first round of French elections has been euro-positive. Further progress on U.S. healthcare and tax reform could shift EUR-USD risk to the downside in the coming weeks. Meanwhile, news that Greece reached a deal with the IMF and EU, along with a continued strong lead in French opinion polls for pro-eu presidential candidate Macron, have helped maintain support for the common currency. France raised a total of EUR 6.17 bln in yesterday's sale of three different treasury bills, with an overall bid to cover ratio of French bonds outperformed throughout the day after the holidays and with markets betting on a robust Macron win on Sunday, but while elsewhere yields moved off highs during the afternoon session, the French 10-year actually dropped -1.1 bp and was at 0.82% and the French yield curve continued to flatten as the 2-year yield actually moved up 0.8 bp today. This is the daily chart of EURUSD, the pair opened at and made a low of and reversed from the lower levels, the pair was trading with some positive bias in European session after gapped up few days ago and made a swing high of , the pair has been trading in a broader range of and on the up side with MACD indicator remaining on the positive territory expects the pair to break above the resistance of levels. Bullish BUY EURUSD TGT SL BUY EURINR FUT TGT SL S3 S2 S1 Pivot R1 R2 R3 (Futures) Exporters Strategy May exports to be held open with a stop below Importers Strategy May imports partially booked at levels. Remaining to be held with a stop above 70.50

4 GBPINR Intraday Outlook The pound sterling surged against the US dollar as UK purchasing manager's index was better-than-expected. The UK CIPS manufacturing PMI stood at 57.3 in April as against 54.2 in March. Analysts had expected the index to fall to The sterling, however, gave up some gains soon after, and was largely steady against the greenback as investors remained cautious ahead of the Federal Reserve s policy meeting this week. The pound is showing an average gain of 0.3% against the G3 currencies, although off the highs seen in the wake of the much stronger than expected April manufacturing PMI survey out of the UK. Cable's high was , with the pair since settling in the low 1.29s, leaving Friday's six-month peak at unchallenged for now. The stellar PMI report will be tonic for British PM May as she heads into the June-8 general election, and helps offset the tough tone the EU is taking on its negotiating stance as the sharp end of Brexit draws closer. The manufacturing sector is enjoying the "sweet spot" that BoE MPC member Broadbent highlighted back in March, benefiting from a weaker exchange rate without any shift in trading terms. This is the daily chart of GBPUSD, during the last trading day the pair after opening at made a low of and reversed from the positive data, the breakout of the small pennant pattern above levels with MACD remaining on the positive side and charts suggest classic pennant pattern and still the pair remains on the buy side irrespective of RSI remaining overbought levels on the daily chart, intraday traders can utilize dips to buy the pair. Bullish BUY SL TGT BUY GBPINR FUT TGT SL S3 S2 S1 Pivot R1 R2 R3 (Futures) Exporters Strategy Importers Strategy May exports partially booked at levels. Stop for the remaining to be maintained at levels. May imports partially hedged at levels

5 JPYINR Intraday Outlook USD-JPY continues to hold the level, bottoming at in U.S. trade, after printing highs, levels last seen on March 21. Resistance is now seen into the region, and some profit taking can be expected into Friday's U.S. jobs report. Recent U.S. data weakness has not had much impact on the dollar, though a jobs report miss could see the greenback turn. USD-JPY had lifted for a second consecutive day, this time logging a new six-month peak at , though this exceeded previous day's high by only five pips amid signs that bullish momentum is flagging. Stock markets and economic data releases out of Asia yesterday were mixed, while Friday's sub-forecast U.S. GDP report has taken some wind out of the dollar's sails. The USDJPY Daily chart,the pair was trading range bound after opening at made a high of , the pair having support at on the downside and resistance at (downward sloping trend line) on the on the upside, few day before the pair the made a shooting star marked by the arrow near the resistance levels of 112. But trading above that signifies continuation of the trend if the pair able to sustain and close above 112. Can expect higher levels in coming session, with downward sloping trend line likely to meet near 113. Where the pair likely to find some reversal. Sideways BUY USDJPY TGT SL SELL JPYINR FUT TGT SL S3 S2 S1 Pivot R1 R2 R3 (Futures) Exporters Strategy May exports partially booked at and Importers Strategy May imports partially booked at and 57.90

6 Economic Data for the Day Time Currency Data Forecast Previous 12:30 PM EUR Spanish Unemployment Change 21.3K -48.6K 01:25 PM EUR German Unemployment Change -10K -30K 02:00 PM GBP Construction PMI :45 PM USD ADP Non-Farm Employment Change 178K 263K 07:30 PM USD ISM Non-Manufacturing PMI :30 PM USD FOMC Statement 11:30 PM USD Federal Funds Rate <1.00% <1.00% 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.