Nivesh Weekly Currency Report

Transcription

1 Report From January, 2018 Important Highlights European Central Bank December meeting minutes signaled that the central bank may phase out the asset purchase program sooner than investors forecast. Japan economic front, a current account surplus of Y1.347 trillion in November, said the Ministry of Finance on Friday down 5.6% on year. UK's trade in goods deficit with the rest of the world was the biggest in five months in November, rising to GBP12.2 billion from GBP11.7 billion in October. U.K. Industrial production was stronger than expected, increasing by 0.4% in November following a 0.2% rise in October. BOJ reduced its purchase of Japanese government securities with maturity of years left to maturity and those with year maturity by 10 billion yen, Reuters reported Tuesday. India industrial output grew an annual 8.4 per cent in November, sharply higher than the downwardly revised 2 per cent in the previous month and 5.1 per cent a year ago. U.S. Consumer Price Index excluding the volatile food and energy components rose 0.3 percent last month also as prices for new motor vehicles, used cars and trucks and motor vehicle insurance increased. Germany's two biggest political parties, the CDU/CSU and SPD, reached a preliminary deal on a formal coalition, paving a way for forming a government. FRO FROM RESEARCH DESK Weekly Change & Technical levels NSE/BSE/MSEI January Future Currency LTP Wk % Pair Change R1 R2 Pivot S1 S2 USDINR EURINR GBPINR JPYINR Currency against U.S. dollar Currency LTP Wk % Trend Pair Change R1 R2 S1 S2 (wk) DOLLAR INDEX Bearish EURUSD Bullish GBPUSD Bullish USDJPY Bearish Foreign exchange reserves, in billion $ Jan 5, 2018 Total Reserves $ bln up $1.75 bln Change in$ (Wk) Seema Yadav Research Analyst Tel: seema.yadav@indianivesh.in IndiaNivesh Securities Limited SEBI Registration No.INH & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai Tel: (022)

2 USD INR January Future LTP Sell around 1 Target 2 Target Stop loss Dollar/rupee has stalled its recent bearish trend and recovered more than 0.36% last week. However, drastic fall in U.S. dollar against the major peers has restricted gain and USDINR retreated from the weekly high , settled at levels. Sharp rise in the euro and pound which surged more than 1% on reports of coalition talks between Germany's two political parties weighed on the dollar. Further, domestic factory data remained somewhat favorable for the Rupee which could support in near term. Technical, Sell strategy given below was initiated but failed to test levels as USDINR rebounded from the weekly low levels. However, on the weekly chart pair yet trading below its massive resistance which is creating probability for weakness in the pair and any rise towards is expect to attract selling activities unless it gives a closing above A break above only cold expect to test and above. Dollar Index Dollar witnessed 1.23% drastic and tested its lowest levels since Jan 2015, settled at levels. It saw drastic fall after euro rose sharply on reports of coalition talks between Germany's two political parties. Dollar has been under heavy pressure last week, and even though China retracted those earlier comments also failed to give support. Also, Bank of Japan's move to trim Japanese government bond (JGB) purchases in the previous session triggered speculation that it could begin tapering its massive, ultra easy monetary stimulus also lifted weakness in the dollar. Technically, On the above chart, dollar index has broken its important support which is coincided with July 2017 swing low and formed a long bearish candle stick on the weekly chart both of which are indicating bearishness and dollar may test and below very soon.

3 EUR INR January Future LTP Buy around 1 Target 2 Target Stop loss Euro/Rupee jumped over 1.45% last week, and tested its three year high on Friday. Abrupt bullish rally was noted on reports of coalition talks between Germany's two political parties. Germany's two biggest political parties, the CDU/CSU and SPD, reached a preliminary deal on a formal coalition, paving a way for forming a government. Also, the rise in euro was previously supported after European Central Bank minutes hinted, yesterday, tighter monetary policy ahead. Technically, after hitting a weekly low , EURINR saw sharp pullback and tested levels before closing at A descending triangle pattern breakout was found on the weekly chart which is indicating for bullishness in near term. On the downside, will act as a crucial support for the week and break below only could show next downside move towards GBP INR January Future LTP Buy around 1 Target 2 Target Stop loss Pound/rupee had a remarkable second week of 2018 as pair jumped towards its highest level since June 2016 Brexit referendum. Although in start of the week pair saw downside pressure amid political jitters with UK government reshuffling, but it was able to trade above its previous week low unaffected by reports of massive labor market outflows and investment and output losses following possible disorderly Brexit scenario. Further, reports that several EU member countries are open to the idea of a softer Brexit, easing worries the EU may adopt a tough stance on trade discussions with Britain has sparked the pound against the dollar. Technically, a long bullish candle stick formation on the weekly chart is indicating for bullish trend in GBPINR. Buy strategy given last week was hit both predicted level Near term GBPINR may test next resistance levels. On the downside, crucial support is seen at sustain trade below only could expect to test levels.

4 JPY INR January Future LTP Buy above 1 Target 2 Target Stop loss JPYINR witntessed more than 2% rally last week. Bank of Japan's announced that it will buy less of long term securities which raised fears that the Japanese central bank may start unrolling its massive stimulus program in the near term has witnessed sharp up side move in yen. BOJ reduced its purchase of Japanese government securities with maturity of years left to maturity and those with year maturity by 10 billion yen, Reuters reported Tuesday. Further, weakness in the dollar also added somewhat strength in the Yen. Technical, Weekly price action resulted in formation of long bullish candle stick. Further, pair settled above 38.2% Fibonacci Retracement of its 3 Sep Dec 2017 fall both of which are appears for bullish outlook for JPYINR. On the upside, strong resistance is seen at and break above it will expect to test and above levels. High Impact Economic Data & Events Schedule during the week Date Time Currency Economic Indicators Forecast Previous Impact :00pm GBP CPI y/y 3.00% 3.10% Negative :30pm EUR Final CPI y/y 1.40% 1.50% Negative 5:15pm GBP MPC Member Saunders Speaks USD Industrial Production m/m 0.30% 0.20% Positive :00am USD FOMC Member Mester Speaks 12:30pm CNY GDP q/y 6.70% 6.80% Negative CNY Industrial Production y/y 6.10% 6.10% Neutral CNY Fixed Asset Investment ytd/y 7.10% 7.20% Negative 1:30pm EUR German Buba President Weidmann Speaks 7:00pm USD Building Permits 1.29M 1.30M Negative USD Unemployment Claims 251K 261K Positive USD Housing Starts 1.27M 1.30M Negative 9:30pm USD Crude Oil Inventories 4.9M :00pm GBP Retail Sales m/m 0.80% 1.10% Negative 8:30pm USD Prelim UoM Consumer Sentiment Positive 10:45pm USD FOMC Member Quarles Speaks Note: Economic data expectations are based on median forecast by economists or Reuters and Bloomberg survey. Here positive impact indicates currency could appreciate and negative indicates currency could depreciate in comparison with US Dollar. Technical Chart Source:Tickerplant *DOS Depends on statement. DOV Depends on Votes. DOR Depends on Report.

5 IndiaNivesh Securities Limited SEBI Registration No.INH Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel, Mumbai Tel (Board): Fax: e mail: research@indianivesh.in Website: Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (IndiaNivesh), for use by the recipient as information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or published or made available to others, in whole or in part without prior permission from us. This document is not to be construed as an offer to sell or the solicitation of an offer to buy any currency pair. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. The information contained in this document has been obtained from sources that are considered as reliable though its accuracy or Completeness has not been verified by IndiaNivesh independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any responsibility or whatever nature for the information, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this material only. IndiaNivesh directors and its clients may have holdings in the currencies mentioned in the report.