7-AUGUST-2017 FROM CEO'S DESK After strong headline July NFP print and slightly better Average hourly earnings on Friday, the US Dollar did get some respite though it has given off some of its strength. The Euro has recovered to 1.18 after touching lows of 1.1730 on Friday. The US 10y yield is currently trading 2.26% and DXY at 93.35. Likely range for today 63.55-63.78. Asian currencies trading slightly to the right. Asian stocks positive. No major data due today. US July CPI print due on Friday will be keenly watched. Also Fed member Dudley's speech post the latest NFP number will be followed. CURRENCY USDINR EURUSD GBPUSD USDJPY COMMENTS The Indian rupee opened lower against the dollar, tracking a recovery in the greenback on Friday following a more-than-expected rise in the US nonfarm payroll for July. Euro fell sharply upto 1.1727 on Friday after US nonfarm payroll employment increased by 209,000 in July, well above market expectations, and the unemployment rate was little changed at 4.3% Sterling fell on Friday and is poised to post its biggest two-day decline in seven weeks after a strong U.S. July payrolls report prompted investors to cut some of their heavy bets against the dollar Against the yen, the dollar gained as much as 0.9 percent to a one-week high of 111.04 yen, rising off recent seven-week lows. Expected to hold 110.00 in the near term. INTRADAY OUTLOOK BEARISH 63.55-63.78 BEARISH 1.1720-1.1820 BEARISH 1.3000-1.3110 BEARISH 110.00-111.05 COMMODITIES/DI GOLD SILVER WTI CRUDE DOLLAR INDEX INFLOWS (07-08-2017) EQUITY DEBT * Figures are in Rs. Crores LAST CHANGE % CHANGE REGION GLOBAL INDICES LAST CHANGE % CHANGE $1,263-1.26-0.10% HANG SENG 27,664 101.82 0.37% $16.25 0.00 0.01% ASIA KOSPI 2,406 12.03 0.49% $49.45-0.13-0.26% NIKKEI 20,076 124 0.62% 93.36-0.19-0.20% SENSEX 32,369 44.03 0.14% INDIA NIFTY 10,081 13.7 0.14% PURCHASE SELL NET CAC 5,203 72.96 1.42% 5565 5509 56 EUROPEAN DAX 12,297 143 1.18% 3356 923 2433 FTSE 7,511 36.94 0.49% US DOW 22,092 66.71 0.30% NASDAQ 5,899 8.71 0.15%
COUNTRY TIME MAJOR GLOBAL EVENT ACTUAL FORECAST PREVIOUS IMPACT ON FX 4/8/2017 AUD 7:00 AM Retail Sales m/m 0.3% 0.2% 0.6% BULLISH CAD 6:00 PM Employment Change 10.9K 13.1K 45.3K BEARISH USD 6:00 PM Non-Farm Employment Change 209K 182K 222K BULLISH No Major Data 7/8/2017 CENTRAL BANKS INTEREST RATES LIBOR RATES ON 1M 3M 6M 1Y CENTRAL BANK RATES NEXT MEETING USD 1.18 1.23 1.31 1.45 1.72 RBI 6.00% October 4, 2017 EUR -0.43-0.40-0.37-0.30-0.19 FED 1.25% September 20, 2017 GBP 0.22 0.25 0.28 0.41 0.61 ECB 0.00% September 7, 2017 JPY 0.04-0.04-0.02 0.01 0.11 BOE BOJ RBA 0.25% -0.10% 1.50% September 14, 2017 September 21, 2017 September 5, 2017 INDIA'S KEY RATES CARRY 10 YEAR BOND YIELD LAST AGAINST USD REPO RATE 6.00% REVERSE REPO 5.75% TRADE INFLATION 1.54% CRR 4.00% INDIA 6.43% INR 5.00% GDP (Q/Q) 6.10% SLR 20.00% US 2.23% EUR 1.00% IIP 1.70% GBP 0.75% JPY -1.10% MONTH END FORWARD PREMIUM- IN RUPEES (BID RATE) MONTH 1M 2M 3M 6M 1Y 2Y 3Y 4Y 5Y 10Y USDINR 0.26 0.48 0.72 1.42 2.76 5.20 7.99 10.91 14.27 27.29 EURINR 0.43 0.81 1.21 2.44 4.87 9.65 14.99 20.59 26.88 53.10 GBPINR 0.42 0.80 1.18 2.37 4.63 8.96 13.82 19.08 24.91 49.94 JPYINR 0.31 0.60 0.89 1.82 3.65 7.36 11.70 16.49 22.05 49.68
OTHER MAJOR NEWS * Dollar holds gains after U.S. jobs report, inflation data in focus * Oil holds near nine-week highs on jobs data, fall in U.S. drill rigs * Sterling set for biggest two-day fall in seven weeks CHART OF THE DAY - EURUSD SPOT RATE- 1.1793 TECHNICAL OBSERVATION Technically,the pair has formed SHOOTING STAR candlestick pattern. However, last week low of 1.1720 is still holding. Closing below this will reverse the medium term trend. Otherwise, we could see trend to extend upto 1.1950-1.2000 levels. INTRADAY RANGE [BEARISH] 1.1720-1.1820 CURRENCY 3 MONTHS OUTLOOK 6 MONTHS OUTLOOK RANGE OUTLOOK RANGE OUTLOOK $ INDEX 91.80-96.50 BEARISH 91.80-99.30 BULLISH EURUSD 1.1300-1.2030 BULLISH 1.1200-1.2030 BEARISH GBPUSD 1.2600-1.3370 BEARISH 1.2600-1.3370 BEARISH USDJPY 108.80-114.40 BEARISH 108.80-116.50 BULLISH AUDUSD 0.7530-0.8150 BULLISH 0.7450-0.8150 BEARISH USDCAD 1.2200-1.2950 BEARISH 1.2200-1.3220 BEARISH
CURRENCY DAILY TECHNICAL CHART
61.96 62.46 62.96 63.46 MORNING COFFEE CURRENCY OPTION STRATEGY RECOMMENDED ON:- 04/08/2017 STRATEGY FOR: EXPORTER FORWARD RATE:- 63.84 (WHEN RECOMMENDED) SPOT RATE: 63.63 (WHEN RECOMMENDED) STRATEGY It is recommended to sell 64.25 Strike Call option at 12 paisa and buy 63.50 Strike Put option at 15 paisa. Here, we are paying premium of 3 paisa. STRATEGY TABLE PAYOFF TABLE USD-INR Spot 63.63 Market Price Net P/L Realization rate 62.5 0.97 63.47 Sell Call @ 64.25 Strike 0.12 62.75 0.72 63.47 Buy Put @ 63.50 Strike 0.15 63 0.47 63.47 Net Premium payable 0.03 63.25 0.22 63.47 63.5-0.03 63.47 PAYOFF CHART 63.75-0.03 63.72 64-0.03 63.97 65 64.25-0.03 64.22 64.5 64 64.5-0.28 64.22 63.5 64.75-0.53 64.22 63 62.5 Market Price 62 61.5 Realization rate 61 60.5 CONCLUSION The USD-INR pair has given breakout on the lower range at 63.90-64.90 which it was holding since last 2 months. Technically, USDINR pair is heading towards 63.30-63.00 levels. We advice to buy vanilla OTM Put option to take advantage of downside market and simultaneously sell OTM Call option to reduce the premium outflow. Risk will start only if market crosses 64.25 on upper side but probability is very low as market has resume its medium term downtrend. This strategy would be beneficial for exporters who don t want to book near term forwards at current levels but want to take advantage of appreciation in rupee.
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