Daily Market Report 01 st Mar 16

Transcription

1 [Type text] Daily Market Report 01 st Mar 16 Research Team IFA Global

2 Domestic and International Highlights Indian rupee opened at after closing the previous session at levels. The intra-day range is seen between levels. India s union budget was pro-rural Amid expectation of a populist budget the finance minister snubbed all of the speculation and focused more on prioritizing on investment, growth and job creation.. Before starting to put his cards forward the finance minister has hinted that the next couple of years are expected to be challenging considering following uncertainty across the globe. The government is expected to focus on ensuring macro-economic stability and prudent fiscal management. Overall the budget was more focused on rural development and brought cheers to small tax payers, those living on rent. China s manufacturing PMI continues to contract in January In January, China s manufacturing PMI continued to contract both the official and private number were disappointing that suggest that the PBoC could take further easing measures to stimulate the economy. The official number in January came in at 49 compared to 49.4 in the previous month; whereas the private number came in at 48 compared to 48.4 in the previous month. Pending home sales fell 2.5% in January The winter wallop may have chilled housing activity in some parts of the country, but overheated home prices are really what are slowing sales nationwide. Home buyers signed 2.5% fewer contracts in January to buy existing homes compared to December. The expectation had been for a slight gain. Pending sales have been higher annually for 17 straight months, but this is the second smallest gain in that time. Pending home sales in the Northeast declined 3.2 percent in January, compared to December, but were 10.9 percent above a year ago. Indian 10 Year Bond Yield Indian bond yields fell by almost 15bps as Budget remained largely positive. Finance minister reiterated government s stance of curtailing fiscal deficit to 3.5% of GDP in FY17. This led to a relief rally in bond market. Hopes of rate cut by RBI following China s surprise CRR cut also boosted sentiments. Expected range 7.58%-7.64%.

3 USD/INR Daily Chart Source: Reuters Overall Outlook & Strategy Trend: The USD/INR pair has breached the crucial support of and is expected to trade with a negative bias for target of Exporters were advised to cover their position as the stoploss of was triggered (They are suggested to discuss their positions with their respective advisors). Importers are advised to cover around for the near month (They are suggested to discuss their positions with their respective advisors). Short term range (7-15 days): Medium term range (3-6 months):

4 Glance at G7 EUR / USD The EUR/USD pair reached a fresh 4-week low during the European morning, hit by dollar's strength and poor EU inflation data. The CPI inflation reading came in at - 0.2% vs the estimate of 0.0%. GBP / USD The British Pound remains under pressure, having extended its decline by a few pips against the greenback, to a fresh multi-year low of before bouncing some. The pair plummeted last week on fears of a Brexit, as the referendum on whether to remain or not within the EU has been set for June 23rd. AUD / USD AUD/USD pared losses and edged higher following the RBA's monetary policy decision to hold rates. On the other hand, Chinese manufacturing sector activity continues to deteriorate, adding to pressure on the Aussie. USD/ JPY A renewed bout of risk-on wave appears to hit the markets, supporting the recovery in the USD/JPY pair from , daily lows. The negative impact of bearish Chinese manufacturing PMI reports was quickly faded by markets, as the recent stimulus measures by China continued to underpin the sentiment. Gold Gold rose for the second successive session bolstered by safe-haven demand after Chinese manufacturing PMI fell in January compared to the previous month. Weak manufacturing PMI number followed an overnight move by the Chinese central bank to cut the reserve requirement ratio and resume its easing cycle. Crude WTI Crude Fight between bulls and bears continued in terms of crude following speculation of tightening of crude production by OPEC and US and on the other hand weak manufacturing PMI number stirred fears of slowing global growth.

5 Dollar Index Dollar rebounded from its intraday lows against its major crosses despite weak set of economic numbers from the U.S. Today market participants will be keeping an eye on the manufacturing PMI number to gauge a trend for the dollar. Economic calendar for the week Date Event 01-Mar-Tue 01-Mar-Tue 01-Mar-Tue GBP Manufacturing PMI USD Unemployment Rate USD ISM Manufacturing PMI

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