Currency Research Desk

Transcription

1 Currency Research Desk Currency weekly October 29, 2012 Global economic review Economic performance All the Financial markets remained at tenterhook expect some of the Asian bourses. However, the two largest economies of the World namely US and China indicated improvement with fairly better economic releases. The US durable goods increased drastically witnessing the biggest jump since 2009, supported by higher aircraft sale while the third quarter GDP grew by 2 percent higher than the market expectation of 1.9 percent and supported bullish sentiments. These improvements have been somewhat tempered by a disappointing US third-quarter earnings season. 186 Corporate of S&P 500 companies have now reported their quarterly results, according to Market Watch. Dow Jones finally settled at losing -1.77%. The Euro-zone continued to fuel the bears with Spain s unemployment reaching a highest level of nearly 25 percent Weak Euro-zone and fall in PMI numbers of France and Germany continue to limit the shared currency, it declined 0.66 percent against the greenback. At, our domestic market thin participation continued in last week, and the local rupee appreciated by 0.49 percent. Dollar Index Currency S2 S1 Close R1 R2 Recommendation Dollar Index Buy at TP then SL TECHNICAL SNAPSHOT Last week, Dollar index opened on negative note and recouped in the later session of the week and settled higher posting 0.58% gains W/w. On technical observations the Dollar Index showed slight positive divergence after formation of Doji candle stick pattern in penultimate week and managed to close above 8 period EMA and 23.6% retracement level for downward rally ranging (86.00 to 72.69). Above weekly charts are suggesting slight upside momentum in Index. This week, Dollar Index may post further gains till the next resistance level of 38.2% retracement i.e After going through the above analysis we recommend to remain on buying for this week. Currency Research Desk Mail Us at currencyresearch@karvy.com 1

2 USD/INR Currency Contract S2 S1 Close R1 R2 Recommendation USDINR MCX-SX Nov USDINR NSE Nov Buy at TP then SL below Buy at TP then SL below The Week Ahead RBI Monetary Policy MCX-SX Nov % % % Dec % % % Jan % % % NSE Nov % % % Dec % % % Jan % % % Fundamental Review and Outlook In the last week the two domestic indices slipped 0.3% each, as investors focused on companies' earnings. The spot rupee settled the week at levels per US dollar. Domestic corporate earnings and the Reserve Bank of India's second-quarter monetary policy review will drive the sentiment for Indian equities next week, while overseas markets may provide further cues to investors. We expect the RBI to keep benchmark interest rates Unchanged, but to lower banks' cash reserve ratio to provide immediate liquidity. However, Investors would have already factored in the likely cut in CRR, and therefore the market may not see any sharp movement once the reduction is announced. Among Nifty companies, BHEL, Dr Reddy's Laboratories, Grasim Industries, Maruti Suzuki India, Power Grid Corp of India and Wipro will release their Jul-Sep results next week. However, it would be very imperative to talk about the global factors as well. Global financial market will be eyeing on major economic events like interest rate declaration of major Asian countries India and Japan. Thereafter focus will shift to US monthly jobs data and unemployment number. Ahead of Presidential election in the coming month, we may expect a further rise in payrolls numbers in Non-farm sector. Likewise, improvement in manufacturing sector may create comparatively higher number of job additions in manufacturing payrolls in October. Besides, PMI numbers of Euro-zone German and UK are likely to show a picture of under growing economic situation. In addition to this unemployment number of Euro-zone and German are due which are expected to increase further. Reflection of ongoing debt concern may further weaken the major confidence indexes. All these factors may likely to keep the shared currency under pressure in the coming week. Looking at the global and domestic factor we believe Indian rupee might continue to remain weak in the next week. Currency Research Desk Mail Us at currencyresearch@karvy.com 2

3 TECHNICAL SNAPSHOT Last week, rupee ended on weaker note losing 0.53% on W/W. As we expected in our previous report the rupee could retest the trendline resistance of , it moved in the same direction and hit a high of But due to holiday sessions in the week rupee missed out to reach the resistance level of and finally settled at forming a Hanging man Candle stick pattern on weekly chart. In this week, rupee could test the resistance levels of and thereafter it may start declined, as rupee has stiff resistance around For this week, to catch the whole move, we recommend to buy at slight lower levels and may sell near the resistance levels of For this week, supports are seen at then and resistance are witnessing at then Recommendation: Rupee (Nov): Buy at TP then SL below Currency Research Desk Mail Us at currencyresearch@karvy.com 3

4 EUR/USD Currency Contract S2 S1 Close R1 R2 Recommendation EURUSD SPOT EURINR MCX-SX Nov Sell at TP then SL Sell at TP SL EURINR NSE Nov Sell at TP SL The Week Ahead Euro- zone Industrial confidence data Fundamental Review Single currency failed to mange at higher levels and ended the week on a lower note at against the US dollar. The Euro-zone continued to fuel the bears with Spain s unemployment reaching a highest level of nearly 25 percent with falling IFO numbers from Germany and Euro-zone. Weak Euro-zone and fall in PMI numbers of France and Germany continue to limit the shared currency. In addition, the S&P downgraded BNP (the French bank) while the import prices in Germany failed to increase and the Euro declined 0.66 percent against the greenback. MCX-SX NSE Nov % % % Dec % % % Outlook Nov % % % Dec % % % In the coming week, Euro may remain on weaker note the PMI numbers of Euro-zone German and UK are likely to show a picture of under growing economic situation. In addition to this unemployment number of Euro-zone and German are due which are expected to increase further. Reflection of ongoing debt concern may further weaken the major confidence indexes. All these factors may likely to keep the shared currency under pressure in the coming week. Economic data for week ahead Date Time Region Event Period Survey Prior 10/29/ :30 GE Consumer Price Index (MoM) Oct P 0.00% 0.00% 10/30/ :25 GE Unemployment Rate (s.a) Oct 6.90% 6.80% 10/30/ :30 EC Euro-Zone Economic Confidence Oct /31/ :30 GE Retail Sales (MoM) Sep 0.30% 0.30% 11/02/ :30 EC PMI Manufacturing Oct F Currency Research Desk Mail Us at currencyresearch@karvy.com 4

5 Technical snapshot Euro prolonged its sideways trading session for another week and ended lower at losing 0.63 percent. Euro is witnessing strong supports around of major EMA s on weekly chart and of a trendline connecting the lower bottoms. However RSI-14 is showing negative divergence and is tending towards down side. Going forward, we expect Euro could test the support of the trendline and could start bouncing back. If pair breaks the trendline support and fails to sustain above it will confirm the downward move in the longer term. Coming up for this week, we expect Euro could remain in range with negative bias and clear break down of trendline support of may extend further weakness in the pair. Currency Research Desk Mail Us at currencyresearch@karvy.com 5

6 GBP/USD Currency Contract S2 S1 Close R1 R2 Recommendation GBPINR MCX-SX Nov Buy at TP then SL GBPINR NSE Nov Buy at TP then SL GBPUSD SPOT Buy at TP then SL15990 Fundamental Review The GBP/USD ended the week with gaining note posting 0.62% percent on weekly basis. The UK GDP rate rose to 0.60% from prior figure of -0.40% showing strengthen in the economy. MCX-SX NSE Nov % % % Dec % % % Nov % % % Dec % % % Jan % % % Economic data for week ahead Date Time Region Event Period Survey Prior 11/01/ :00 UK PMI Manufacturing Oct Technical snapshot Last week Pound edged higher by giving a halt to the continuous losing streak. Pound ended at gaining 0.62 percent on W/W. On going through the chart, we can notice a CUP and Handle pattern the daily chart and Pound has given a clear break out of the handle pattern and is confirming the bullish move in the pair. Momentum Indicator RSI-14 is also heading toward upside which has currently trading at 0.57 on weekly chart. This week, Pound is expected continue its bull rally further and may test the highs of By going through the above analysis we recommend to remain on buying side in Pound. For this week, supports are witnessing at then and resistances are seen at then Currency Research Desk Mail Us at currencyresearch@karvy.com 6

7 USD/JPY Currency Contract S2 S1 Close R1 R2 Recommendation JPYINR MCX-SX Nov JPYINR NSE Nov Buy at TP then SL Buy at TP then SL USD/JPY SPOT Buy at TP then Fundamental Review The USD/JPY pair had fallen as low as in the mid of the week and finally settled at by recovering slightly in the late sessions against the Greenback. MCXSX Nov % % % Dec % % % NSE Nov % % % Dec % % % Jan % % % Economic data for week ahead Date Time Region Event Period Survey Prior 10/30/ :20 JN Industrial Production (MoM) Sep P -3.10% -1.60% 10/30/2012 JN BOJ Target Rate 30-Oct 0.10% 0.10% Outlook This week Bank of Japan will be eye by the financial market and is expected to provide further stimulus to the market by asset purchase program. We may expect the central bank to go for a second time easing after September month in order to achieve inflation target of 1 percent. Thus, domestic currency Yen may continue to appreciate which may ultimately add on Green back to rise further. Currency Research Desk Mail Us at currencyresearch@karvy.com 7

8 Technical Snapshot Yen closed on a second straight gaining streak. Yen tested a high of in the mid of the week and on final session it fell by a percent adding 0.37 percent on W/W. on weekly chart it Yen broke the 38.2% retracement level for the range but failed to close above it. Momentum Indicator RSI-14 has also inched higher from the lows if 0.46 to 0.55 and is still showing upside momentum in the pair. Coming up, for this week Yen could trade in a range with upside bias and it will be better to buy at lower levels. Major economic events for the week Date Time Region Event Period Survey Prior 10/29/ :20 JN Retail Trade MoM SA Sep -1.50% 1.50% 10/29/ :00 US Personal Income Sep 0.40% 0.10% 10/29/ :00 US Personal Spending Sep 0.60% 0.50% 10/29/ :30 GE Consumer Price Index (MoM) Oct P 0.00% 0.00% 10/29/ :00 US Dallas Fed Manf. Activity Oct /30/ :20 JN Industrial Production (MoM) Sep P -3.10% -1.60% 10/30/ :30 JN Vehicle Production (YoY) Sep % 10/30/ :00 IN Reverse Repo Rate 30-Oct 7.00% 7.00% 10/30/ :00 IN India REPO Cutoff Yld 30-Oct 8.00% 8.00% 10/30/ :00 IN Cash Reserve Ratio 30-Oct 4.25% 4.50% 10/30/ :25 GE Unemployment Rate (s.a) Oct 6.90% 6.80% 10/30/ :30 EC Euro-Zone Consumer Confidence Oct F /30/ :30 EC Euro-Zone Economic Confidence Oct /30/ :30 EC Euro-Zone Indust. Confidence Oct /30/ :30 EC Euro-zone Services Confidence Oct /30/ :30 US Consumer Confidence Oct /30/2012 JN BOJ Target Rate 30-Oct 0.10% 0.10% 10/31/ :30 GE Retail Sales (MoM) Sep 0.30% 0.30% 10/31/ :30 EC Euro-Zone CPI Estimate (YoY) Oct 2.50% 2.70% 10/31/ :30 EC Euro-Zone Unemployment Rate Sep 11.50% 11.40% 10/31/ :30 US MBA Mortgage Applications 26-Oct % 10/31/ :00 US Employment Cost Index 3Q 0.50% 0.50% 10/31/ :15 US Chicago Purchasing Manager Oct /31/2012 IN Fiscal Deficit INR Crore Sep /01/ :30 CH Manufacturing PMI Oct Currency Research Desk Mail Us at currencyresearch@karvy.com 8

9 11/01/ :15 CH HSBC Manufacturing PMI Oct /01/ :30 IN India October Markit 11/01/ :30 JN Vehicle Sales (YoY) Oct % 11/01/ :00 UK PMI Manufacturing Oct /01/ :45 US ADP Employment Change Oct 135.0K 162.0K 11/01/ :00 US Nonfarm Productivity 3Q P 1.50% 2.20% 11/01/ :00 US Unit Labor Costs 3Q P 1.00% 1.50% 11/01/ :00 US Initial Jobless Claims 27-Oct 370K 369K 11/01/ :00 US Continuing Claims 20-Oct 3250K 3254K 11/01/ :15 US Bloomberg Consumer Comfort 28-Oct /01/ :30 US ISM Manufacturing Oct /01/ :30 US ISM Prices Paid Oct /01/ :30 US Construction Spending MoM Sep 0.70% -0.60% 11/02/ :30 US Total Vehicle Sales Oct 14.95M 14.88M 11/02/ :30 US Domestic Vehicle Sales Oct 11.50M 11.49M 11/02/ :25 GE PMI Manufacturing Oct F /02/ :30 EC PMI Manufacturing Oct F /02/ :00 US Change in Nonfarm Payrolls Oct 125K 114K 11/02/ :00 US Change in Private Payrolls Oct 125K 104K 11/02/ :00 US Change in Manufact. Payrolls Oct -2K -16K 11/02/ :00 US Unemployment Rate Oct 7.90% 7.80% 11/02/ :00 US Change in Household Employment Oct /02/ :15 US ISM New York Oct /02/ :30 US Factory Orders Sep 4.60% -5.20% 11/03/ :30 CH Non-manufacturing PMI Oct /01/ :00 US Unit Labor Costs 3Q P 1.00% 1.50% 11/01/ :00 US Initial Jobless Claims 27-Oct 370K 369K Prepared by:- Aurobinda Prasad (aurobind@karvy.com) Research Head Harish J (j.harish@karvy.com) - Technical Analyst 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. Currency Research Desk Mail Us at currencyresearch@karvy.com 9