[Type text] Daily Market Report 23 rd Oct 15 Research Team IFA Global
Domestic and International Highlights Indian rupee opened at 64.79 after closing the previous session at 65.12 levels. The intra-day range is seen between 64.75-65.05 levels. ECB hates Euro Rally European Central Bank, which has kept monetary policy stance unchanged, has yet again killed the Euro rally. The EUR/USD pair, which had spiked close to 1.15 levels, has fallen more than 200 pips after comments of ECB Governor, Mario Draghi. Draghi has made it clear that if prevailing macroeconomic condition warrants, ECB will increase its current quantitative easing programme to support the economy. The Global equity markets cheered the comments as major indices rallied nearly 2%. RBI unveils gold monetisation scheme norms To cut down on the import bill, the Reserve Bank of India (RBI) on Thursday announced a gold monetisation scheme (GMS) that allows individuals, trusts and mutual funds to deposit gold with banks and earn an interest on it. The designated banks will accept gold deposits under the short-term (one to three years) bank deposit as well as medium-term (five to seven years) and long-term government deposit schemes (12 to 15 years). The short-term bank deposits will attract applicable cash reserve ratio and statutory liquidity ratio (SLR). However, the stock of gold held by the banks will count towards the general SLR requirement. India less exposed to global risk: Moodys India's relatively resilient growth and policy reform momentum will slowly stabilize inflation, improve the regulatory environment, increase infrastructure investment and lower government debt ratios. India is therefore relatively shielded from the global turmoil. The rating agency has a positive outlook on India. Indian 10 Year Bond Yield Indian bond markets continue to trade in a narrow band in absence of fresh triggers. The risk on sentiments in global markets post ECB announcement is likely to keep bond markets under pressure. The markets are likely to trade range bound. Intraday range is 7.56%-7.60%.
USD/INR Daily Chart Source: Reuters Technical Outlook The USD/INR pair has reversed after taking support at 61.80% Fibonacci retracement. We are observing a bullish hidden divergence suggesting strength in the pair. Overall Outlook & Strategy Trend: The USD/INR pair has formed a double bottom near levels of 64.70, the pair is expected to regain some momentum amid the recovery in US dollar index. Near term resistance is at 65.40-80 levels. Exporters are advised to cover around 65.40-80 levels. (They are suggested to discuss their positions with their respective advisors). Importers were advised to cover at levels of 64.75-80. (They are suggested to discuss their positions with their respective advisors). Short term range (7-15 days): 64.70-65.80 Medium term range (3-6 months): 64.50-68.25
Glance at G7 EUR / USD The EUR/USD pair tumbled more than 200 pips after the dovish comments of ECB Governor, Mario Draghi. Draghi signalled an increase in current quantitative easing programme, where in ECB prints nearly 60 bn per month, to support economy. GBP / USD The Cable showed remarkable strength against its European counter-part as UK s retails sales beat the estimates. The UK retail sales released at 1.9% against the expectation of 0.3%. The GBP/USD pair, which reclaimed 1.5400 levels, will take further cues from movement in US dollar index. AUD / USD The AUD/USD regained the 100-dma levels of 0.7250 and moved higher as the recent move by ECB led to a renewed demand for riskier assets which in turn resulted in demand for higher yielding currencies including the Aussie. USD/ JPY The Japanese yen rose consecutively for the sixth day staying just shy of 121 handle as the risk on sentiment fuelled by ECB comments resulted in lack of demand for safe haven yen. The USD/JPY pair will take further cues from US dollar index. Gold Gold ticked up from its lowest in over a week on Friday. The dollar climbed to its highest in nearly a month on Thursday against a basket of major currencies as the euro slumped following signs the European Central Bank could introduce more stimulus as early as December. Crude WTI Crude Oil futures settled at their lowest level in nearly three weeks on Wednesday after U.S. government data revealed a jump in weekly crude supplies. On Wednesday, the U.S. Energy Information Administration reported an increase of eight million barrels in crude supplies for the week ended Oct. 16.
Dollar Index The Euro s pain has converted in Dollar s gains as US dollar index reclaimed 96 levels. The broad recovery in US dollar was further supported by improved existing home sales and unemployment claims data. The Unemployment claims released at 259K levels against the expectation of 266K. Economic Calendar Date 19-Oct-Mon 19-Oct-Mon 20-Oct-Tue 20-Oct-Tue 20-Oct-Tue 22-Oct-Thus 22-Oct-Thus 22-Oct-Thus 23-Oct-Fri 23-Oct-Fri Description CNY GDP q/y CNY Industrial Production y/y AUD - Monetary Policy Meeting Minutes GBP BOE Gov Carney Speaks USD Building Permits GBP Retail Sales m/m EUR Minimum Bid Rate EUR ECB Press Conference EUR Unemployment Claims EUR French Flash Manufacturing PMI
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