4-September-2017 FROM CEO'S DESK The USD had weakened in an immediate reaction post the release of weak US August NFP print. Wage growth too continued to disappoint. Euro rallied to 1.1975 but soon retraced on ECB comments that Euro strength was a Dollar problem. South Korean Won is weaker by around 0.9% against USD on news of another missile test by North Korea over the weekend. Other Asian currencies are trading 0.1-0.2% weaker. Likely range 63.85-64.05 with bias to the up side. Asian equities are trading with cuts up to 0.5%. Among other data this week, we have the RBA rate decision tomorrow and ECB rate decision and post policy conference on Thursday. Also Eurozone Q2 GDP data. Eurozone producer price index only data due today. FPIs invested net USD 69mn in debt and USD 34mn in equity on Thursday. CURRENCY USDINR EURUSD GBPUSD USDJPY COMMENTS USDINR opens lower as robust foreign inflows helps rupee offset risk aversion stemming from North Korea bomb test, pair now at 63.95 against 64.02 previous close. The dollar reversed its losses and pushed higher with the euro last down 0.3 percent at $1.1870 after briefly hitting a session high of $1.1979 producing spike in the pair after disappointing US NFP data numbers. Sterling hit a three-week high on Friday, boosted by a stronger-than-expected business sentiment survey as well as a forecast-lagging U.S. non-farm payrolls report that knocked the dollar down. The yen strengthened almost 1 percent after North Korea tested a nuclear bomb on Sunday, spurring demand for haven assets. Further, pair remained under pressure after weaker US job data INTRADAY OUTLOOK BULLISH 63.85-64.05 BEARISH 1.1850-1.1940 NEUTRAL 1.2910-1.2990 BEARISH 109.20-110.00 COMMODITIES/DI GOLD SILVER WTI CRUDE DOLLAR INDEX INFLOWS (01/09/2017) EQUITY DEBT * Figures are in Rs. Crores LAST CHANGE % CHANGE REGION GLOBAL INDICES LAST CHANGE % CHANGE $1,338 8.40 0.63% HANG SENG 27,845-108 -0.39% $17.91 0.09 0.54% ASIA KOSPI 2,338-18.9-0.82% $47.45 0.16 0.34% NIKKEI 19,511-190 -0.97% 92.68-0.14-0.15% SENSEX 31,841-50.31-0.16% INDIA NIFTY 9,962-12.2-0.13% PURCHASE SELL NET CAC 5,123 37.68 0.74% 8454 8010 444 EUROPEAN DAX 12,142 86.80 0.72% 444 221 223 FTSE 7,438 7.88 0.11% US DOW 21,987 39.46 0.18% NASDAQ 5,987-0.70-0.01%
-21.55 COUNTRY TIME (IST) MAJOR GLOBAL EVENT ACTUAL FORECAST PREVIOUS 1/9/2017 GBP 2:00 PM Manufacturing PMI 56.9 55.00 55.10 USD 6:00 PM Non-Farm Employment Change 156K 180K 209K USD 7:30 PM ISM Manufacturing PMI 58.8 56.5 56.3 IMPACT ON FX 4/9/2017 GBP 2:00 PM Construction PMI 52.1 51.9 CENTRAL BANKS INTEREST RATES LIBOR RATES ON 1M 3M 6M 1Y CENTRAL BANK RATES NEXT MEETING USD 1.18 1.23 1.32 1.45 1.71 RBI 6.00% October 4, 2017 EUR -0.43-0.40-0.37-0.31-0.21 FED 1.25% September 20, 2017 GBP 0.22 0.25 0.28 0.40 0.59 ECB 0.00% September 7, 2017 JPY 0.04-0.06-0.03-0.01 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 2.36% CRR 4.00% INDIA 6.48% INR 4.75% GDP (Q/Q) 5.70% SLR 20.00% US 2.16% EUR 1.25% IIP -0.10% GBP 1.00% JPY -1.35% MONTH END FORWARD PREMIUM- IN RUPEES (BID RATE) MONTH 1M 2M 3M 6M 1Y 2Y 3Y 4Y 5Y 10Y USDINR 0.22 0.45 0.68 1.37 2.77 5.21 8.07 11.05 14.44 27.64 EURINR 0.38 0.78 1.17 2.41 4.94 9.71 15.19 21.01 27.40 53.86 GBPINR 0.36 0.75 1.12 2.29 4.63 8.88 13.76 19.05 24.78 49.74 JPYINR 0.28 0.57 0.87 1.81 3.72 7.45 11.89 16.69 22.18 49.22
OTHER MAJOR NEWS * Yen, bonds and gold gain after N.Korea tests hydrogen bomb. * US NFP increased by 156000 in August, unemployment rate was little changed at 4.4% * ECB may not have final QE plan ready untill December- Bloomberg CHART OF THE DAY - EURUSD SPOT RATE- 1.1880 TECHNICAL OBSERVATION After making multi month high above 1.2050 levels, last week pair corrected below 1.1900 levels to form SHOOTING STAR CANDLESTICK pattern.hence, it is expected that short term top has been made. In the near term, the pair is expected to correct upto 1.1750-1.1680 levels. INTRADAY RANGE [BEARISH] 1.1850-1.1940 CURRENCY 3 MONTHS OUTLOOK 6 MONTHS OUTLOOK RANGE OUTLOOK RANGE OUTLOOK $ INDEX 91.50-96.50 BEARISH 91.50-99.30 BULLISH EURUSD 1.1300-1.2070 BULLISH 1.1200-1.2070 BEARISH GBPUSD 1.2600-1.3370 BEARISH 1.2600-1.3370 BEARISH USDJPY 107.00-112.30 BEARISH 107.00-114.50 BULLISH AUDUSD 0.7530-0.8150 BULLISH 0.7450-0.8150 BEARISH USDCAD 1.2200-1.2950 BEARISH 1.2200-1.3220 BEARISH GOLD 1195-1375 BULLISH 1150-1400 BEARISH
CURRENCY DAILY TECHNICAL CHART
RECOMMENDED ON:- 31/08/2017 FORWARD RATE:- 64.42 (OCT EXPIRY) CURRENCY OPTION STRATEGY STRATEGY FOR: IMPORTER SPOT RATE: 64.00 (WHEN RECOMMENDED) STRATEGY It is recommended to Buy 64.50 strike call option at 37 paisa, Sell 64.75 Strike Call option at 27 paisa and Sell 63.50 Strike Put option at 0.10 paisa. Here, it s a Zero Cost Strategy. Market Price Buy Call Sell Call @ Sell Put Net Import Net Payoff @64.50 64.75 @63.50 rate STRATEGY TABLE 63-0.37 0.27-0.4-0.5 63.5 USD-INR Spot 64 63.25-0.37 0.27-0.15-0.25 63.5 Forward rate 64.42 63.5-0.37 0.27 0.1 0 63.5 Buy Call @ 64.50 Strike 0.37 63.75-0.37 0.27 0.1 0 63.75 Sell Call @64.75 Strike 0.27 64-0.37 0.27 0.1 0 64 Sell Put @63.50 Strike 0.10 64.25-0.37 0.27 0.1 0 64.25 Net Premium payable 0 64.5-0.37 0.27 0.1 0 64.5 64.75-0.12 0.27 0.1 0.25 64.5 PAYOFF CHART 65 0.13 0.02 0.1 0.25 64.75 65.25 0.38-0.23 0.1 0.25 65 65.5 0.63-0.48 0.1 0.25 65.25 65.75 0.88-0.73 0.1 0.25 65.5 CONCLUSION Case I : If USD-INR expires below 63.50 on expiry, then net import realization will be 63.50 which is anyhow better than booking forward today at 64.42. Case II: If USD-INR expires between 63.50-64.50, then net import realization will be at spot market which is better than booking forward at 64.42. Case III: If USD-INR expires above 64.50 on expiry, then net import realization will be at (Spot 0.25 Paisa) which is better than market rate.
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