Currencies Weekly Report

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1 Currencies Weekly Report Powered by Karvy Forex & Currencies Pvt. Ltd. Monday 03 Jul 2017 Global Economic Review & Outlook President Donald Trump's first meeting with Indian Prime Minister Narendra Modi at the White House. The duo touted ties between India and the United States during a series of events, with both heralding the military cooperation between the United States and India. Though a largely controversy free visit, the focus on military cooperation with India thrusts the new President into the delicate world of India-Pakistan relations. Trump spoke with Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe ahead of expected meetings with the leaders of Asia's two biggest economies at a Group of 20 nations summit in Germany later this week. Both leaders reaffirmed their commitment to a denuclearized Korean Peninsula," the White House said of Trump's call with Xi from his resort property in Bridgewater, New Jersey, where he is spending a long weekend. European Central Bank President Mario Draghi intended to signal tolerance for a period of INDICES Last Price Previous Week % CHANGE weaker inflation, not an imminent policy tightening, when his comments sent the euro NASDAQ higher this week, sources familiar with Draghi's thinking said on Wednesday. Draghi's intention was to set up September as the earliest the bank would discuss rolling back DOW JONES stimulus, they said, but stressed it was by no means certain that it would come to a decision NIKKEI then. HANGSENG Bank ofengland Governor Mark Carney in a meeting held in previous week sounded hawkish unexpectedly where he said some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional. These comments from the British central banker has helped the Pound to surge and hit the 1.30 mark. CAC DAX FTSE Currencies Last Price Previous Week % CHANGE DXY EURUSD GBPUSD USDJPY RBI Reference Rate USDINR Forward Rates (Month End) MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY 1 Month 3 Month 6 Month 9 Month 12 Month USDINR Monday EURINR Tuesday GBPINR Wednesday JPYINR Thursday Friday

2 Dollar Index Outlook US dollar index closed for the week at compared to previous week s close of Trading range for the week was US dollar index mostly traded weighted against a basket of currencies last week following the comments from Senate Majority Leader Mitch McConnell who has delayed the vote on the Republicans' healthcare bill until after Congress's 4 July recess. This move has created doubt in the investor s community about Trumps ability to push his pro-growth policies. Later the same week Fed Chair Yellen spoke in London where she failed to strongly reinforce her hawkish bias. Yellen said the federal reserve made it clear rates will rise very gradually and that a gradual rate-hike pace is well anticipated by the markets. These less than anticipated hawkish comments from the fed chair further weighed on US dollar. Later the same week Bank of England Governor Mark Carney and European Central Bank President Draghi surprised the markets by turning hawkish which resulted in stronger EURO and Pound against US dollar. And this has dragged US dollar index to a 1-years low at Coming to economic reports most of the data was reported softer than expected. Looking ahead we have Manufacturing PMI, ISM Manufacturing PMI and Employment reports to be published for the month of June to be reported on Monday 3rd July 2017 along with a speech from FOMC member Bullard. Tuesday 4th July 2017 US is closed for Independence Day. Wednesday, 5th July we have US Factory Orders and FOMC meeting minutes of 14th, 15th policy meet. Thursday, July 6, 2017 ADP Nonfarm Employment Change, Initial Jobless Claims, Trade Balance, Markit Composite PMI, Services PMI and ISM Non-Manufacturing PMI scheduled to be released. On Friday, July 7, 2017 we have Nonfarm Payrolls, Average Hourly Earnings, Unemployment Rate and Private Nonfarm Payrolls due to be reported. This is the daily chart of dollar index, the instrument traded in a broader range of on the upside and made a 9months low of and now trading above levels, the instrument showing some sign of relief rally coming in buy again 20DMA is likely to act as a resistance where the bears will likely to come in so utilize higher levels to sell the instrument. Weekly Bias Weekly Trading Strategy (SPOT) Weekly Range (SPOT) Sideways Sell DXY TGT SL S3 S2 S1 Pivot R1 R2 R

3 Rupee Outlook Indian Rupee against U.S. dollar closed for the week at compared to previous week s close of Trading range for the week was This was quite a volatile week of USD-INR pair. There was no major economic data reported in the previous week from Indian context but the key focus of the week was GST which was implemented from 1st of July. Even uncertainty in US has led for some more volatility.us dollar index mostly traded weighted against a basket of currencies last week following the comments from Senate Majority Leader Mitch McConnell who has delayed the vote on the Republicans' healthcare bill until after Congress's 4 July recess. This move has created doubt in the investor s community about Trumps ability to push his pro-growth policies. Later the same week Fed Chair Yellen spoke in London where she failed to strongly reinforce her hawkish bias. Yellen said the federal reserve made it clear rates will rise very gradually and that a gradual rate-hike pace is well anticipated by the markets. Looking ahead even there is no major economic data scheduled to release this week. The key focus would be on US dollar movement against majors and expect the same kind movement to be replicated in USD-INR pair. This is the daily chart of USDINR, the pair has traded in the broader range of on the downside and on the higher side, the pair has been trading side wise for couple of weeks, after making low of 64.16(9thjune 2017) the pair had a slow recovery but is finding resistance at 64.80, if the pair able to surpass and close above the said levels can trigger a strong move on the upside with psychological levels of acting as a resistance with MACD indicator remaining above the zero line expects to pair to trade with a positive bias during the week. Weekly Bias Weekly Trading Strategy Weekly Range (SPOT) Bullish (SPOT) BUY USDINR FUT TGT SL R2 R July Exports partially hedged at on Spot ( ) Imports to be hedged partially targetting on Spot

4 Euro Outlook EURO closed for the week at compared to previous week s close of Trading range for the week was Key reason for euro s appreciation against US dollar was because of the hawkish comments from ECB s President Draghi, where he said ECB may change policy to keep stance unchanged suggesting that the ECB could soon move from their current accommodative stance to a neutral one. These comments from the central banker have helped the euro to breach 1.13 marks. Post that we have seen EUR/USD pair sustained above the levels of 1.13 and further headed towards mark after being boosted by better than expected EZ data, where Germany s business climate index hit a record high as businesses look forward to a continued upswing in the region s largest economy as well as inflation rose 0.2%, taking the year-over-year rate back up to 1.4% where economists had anticipated the growth rate would slowdown. Looking forward on Monday, July 3, 2017 we have German Manufacturing PMI, EZ Manufacturing PMI and Unemployment Rate scheduled to be released. Tuesday, July 4, 2017 we have ECB's Praet scheduled to speak. On Wednesday, July 5, 2017 we have German Services PMI, Markit Composite PMI, Services PMI and Retail Sales. On Thursday, July 6, 2017 we have German Factory Orders scheduled to be released along with ECB Publishes Account of Monetary Policy Meeting. On Friday July 7, 2017 we have German Industrial Production numbers due to be reported. This is the daily chart of EURUSD the pair trade in a broader range on the lower side and on the higher side during the week, the pair had a strong move in the last week after violating the strong resistance of 1.13 with flag pattern breakout the pair shot up and touched a highs of , now the pair saw some correction that corrections can be utilize to go long near 1.13 where the pair breakout last week, with MACD giving crossover expects the pair to trade higher during the week. Weekly Bias Weekly Trading Strategy Weekly Range (SPOT) Bullish-Sideways BUY EURUSD TGT SL BUY EURINRFUT TGT SL R2 R3 (SPOT) July Exports to be partially hedged targetting on Spot July Imports to be held open for now

5 British Pound Outlook Cable closed for the week at compared to previous week s close of Trading range for the week was Following the 5-3 vote in favor of holding interest rates in recent policy meeting, Bank of England Governor Mark Carney in a meeting held in previous week sounded hawkish unexpectedly where he said some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional. These comments from the British central banker has helped the Pound to surge and hit the 1.30 mark. As well as Prime Minister May s survival of the Queen s vote to form minority government narrowly defeated Labor, allowed May to keep her job, this further helped Pound to appreciate. Looking into the economic reports most of the data was reported flat. Looking ahead we have Manufacturing PMI scheduled to be reported along with a speech from BoE Gov Carney. On Tuesday, July 4, 2017 we have Construction PMI due to be released. On Wednesday, July 5, 2017 we have Halifax House Price Index, Manufacturing and Industrial Production and Trade Balance due to be reported and later the same day the focus would be on comments from BoE Gov Carney who is scheduled to speak. This is the daily chart of GBPUSD pair the pair traded in the broader range of on the downside and on the higher side, the pair had a strong move from the lower levels and violated the 1.29 resistance, the pair had given a golden crossover of 50DMA above 200DMA marked by the arrow, now pair is find strong supply near if able to manage and close above expect a strong momentum on the upside as MACD indicator remaining on the positive side, so traders can utilize dips to buy the pair. Weekly Bias Weekly Trading Strategy Weekly Range (SPOT) Bullish-Sideways BUY GBPUSD TGT SL BUY GBPINR FUT TGT SL R2 R4 (SPOT) July Exports to be partially hedged targetting on Spot July Imports to be held open for now

6 Japanese Yen Outlook Japanese Yen closed for the week t compared to previous week s close of Trading range for the week was Recently Bank of Japan Gov. Haruhiko Kuroda acknowledged the downsides of his negative-interest-rate policy, suggesting caution about further reductions. Japanese retail sales rose less than expected in May as sales of durable goods and clothes slowed, falling substantially from April's annual increase though analysts expect sales to continue rising as a trend. Retail sales rose for the seventh straight month at 2.0 percent in May from a year ago, data from the Ministry of Economy, Trade and Industry showed on Thursday. It slowed from 3.2 percent in April and undershot the median estimate of 2.6 percent growth in a Reuter s poll. Whereas Household Spending in Japan decreased 0.10 percent in May of 2017 over the same month of the previous year. Household Spending in Japan averaged percent from 2001 until 2017 and Industrial Production increased 6.80 percent in May of 2017 over the same month in the previous year. Looking forward, we have no major economic data scheduled to be released this week. The key focus would be on US dollar movement against majors and expect the same kind movement to be replicated in USD-JPY pair. This is the daily chart of USDJPY pair, the pair traded in a narrow range of on the lower side and on the higher side, few weeks back the pair found a strong resistance near the downward sloping trend line and reversed, the pair is having a strong support near with downward trend line approaching the pair is expect to take resistance and likely to reverse some of its gain, if able to sustain and close above expects a momentum to come in so 113. Levels is likely to act as a pivot point for the pair in the week. Weekly Bias Weekly Trading Strategy Weekly Range (SPOT) Sideways-Bearish SELL USDJPY TGT SL JPYINR FUT TGT SL R2 R4 (SPOT) July Exports to be partially hedged targetting on Spot July Imports to be partially booked targetting on Spot

7 Economic Data for the Week Date Time Currency Data Forecast Previous :30 PM USD ISM Manufacturing PMI :00 PM GBP Construction PMI :00 PM GBP Services PMI :30 PM USD Factory Orders m/m -0.4% -0.2% 11:30 PM USD FOMC Meeting Minutes :00 PM EUR ECB Monetary Policy Meeting Accounts 5:45 PM USD ADP Non-Farm Employment Change 181K 253K 6:00 PM USD Unemployment Claims 245K 244K 7:30 PM USD ISM Non-Manufacturing PMI :30 PM USD Crude Oil Inventories 0.1M :00 PM GBP Halifax HPI m/m 0.2% 0.4% 2:00 PM GBP Manufacturing Production m/m 0.4% 0.2% 2:00 PM GBP Goods Trade Balance -10.9B -10.4B Day 1 All G20 Meetings 6:00 PM USD Average Hourly Earnings m/m 0.3% 0.2% 6:00 PM USD Non-Farm Employment Change 175K 138K 6:00 PM USD Unemployment Rate 4.3% 4.3% Tentative GBP BOE Gov Carney Speaks 8:30 PM USD Fed Monetary Policy Report 3:15 PM GBP MPC Member Cunliffe Speaks Day 2 All G20 Meetings Report prepared by: Siddhesh Ghare siddhesh.ghare@karvy.com Deepak Agarwal deepak.agarwal@karvy.com Shashank Damaraju shashank.damaraju@karvy.com Head Office Karvy Millennium,Plot No 31, Financial District, Gachibowli, Hyderabad T: / 6635 Corporate Office 131, Andheri Industrial Estate, Off Veera Desai Road, Andheri (W), Mumbai T: , Mob No 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 onsources 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.