Author: Sheetal

Certain event with an uncertain tone!! What would be effect on the markets??

Sheetal

The US Federal Reserve has decided to keep interest rates at between 0.25% and 0.5%.The central bank said the labour market was strengthening, but it was still looking for inflation to reach its 2% target and expected the US economy to continue to “expand at a moderate pace”. The US central bank last raised rates in December, saying it expected to raise rates four times in 2016. But that view has changed to twice this year.

Hence after hearing fed speech we conclude that it more like a Dovish tone compared to Hawkish before few months. The reasons for being dovish are that other world economies are slowing and adapting negative interest rate on the other side US’s inflation came to three years high i.e 2.3%, well above the Fed’s target. Inflation and the job market have been the two key factors in the Fed’s decision to raise rates. The US labour market has been improving. The unemployment rate fell below 5% in January, which is a further sign of a strengthening economy.

What it all mean for the global markets? Soon after the Fed’s statement US dollar plunge near its crucial resistance of $1.13 against the Euro on the other side Bullions climbed high because of an inverse relation with the USD and delaying in rate hike. Major world market gave a mixed clue while on the other side Nifty climbed again above 7550 levels.  We assume market soon discount the rate hike decision which is pending in the month of June 2016.

Hence for the coming few months we assume Global markets might remain in a tight range with a mild positive bias and post that we assume correction in the markets and in an INR. INR might rise till 66 levels against the USD and post that we assume fall till 68.70 levels and Nifty might correct till 7340-7200 levels. Gold would act strong till $1280-90 levels above this may rise till $1320. But rising rate news might discount the Gold price till $1210-1180 in the coming months.

Currency Insight

Sheetal

Rupee trades higher against US dollar 

Rising for the second straight day, the rupee gained 9 paise to 66.09 against the US dollar in early trade on Friday, as the greenback fell in overseas markets on hopes that the post the liftoff, any rate hike by the US Federal Reserve would only be gradual.

The domestic currency had closed 12 paise higher at 66.18 on Thursday on fresh dollar selling by banks and exporters.

Europe’s Quiet Currency War Besets Nations Losing Inflation Grip

From Stockholm, where the Riksbank will publish the minutes of its latest policy meeting on Tuesday, to Prague, Copenhagen and Zurich, officials in countries circling the currency bloc are waiting for the European Central Bank president to say next month whether he’ll expand stimulus. Only then will it be clear whether they’ll need to retaliate with more asset purchases, rate cuts and currency interventions of their own to dig in against imported disinflation.

Draghi’s bonanza of cheap cash is depressing financial returns in the euro area and driving investment flows into neighboring countries, pushing up their currencies and defeating their efforts to hit their own inflation targets. Looser monetary policy is in the cards even in countries where economic growth is strong and asset markets are overheating.

USD/JPY stabilized around 123.20

The greenback has surrendered some its initial gains vs. its Japanese counterpart on Tuesday, taking USD/JPY to the 123.25/20 band, or session lows.

Spot continues to recover from last week’s decline, managing to rebound from recent lows in the 122.30/20 band and trading at shouting distance from 3-month tops around 123.50.

Ahead in the session, USD will be in the limelight as US inflation figures measured by the CPI are due. Consensus expects consumer prices to have gained 0.1% on a year to October, while Core prices are expected at 1.9% YoY.

Important events and their explanation:

 

Time ( IST) Currency Economic Data Actual Expectation Previous
3:15am USD FOMC Member Fischer Speaks
3:00pm GBP Public Sector Net Borrowing 7.5B 5.5B 8.3B
 9:45pm USD FOMC Member Dudley Speaks

 

Quick Glance :

 

Instrument Price %Chg Volume OI
USD/INR 66.19 0.17 788526 960103
EUR/INR 70.72 -0.82 37048 48836
GBP/INR 101.26 0.07 21059 41217
JPY/INR 53.90 -0.64 7908 15311

 

Technical touch :

USDINR

FOREX USDINR_Daily_1Year

On the Currency part, USDINR is trading just under its crucial resistance of 66.46 levels, which is also the Neckline of an inverted Head and Shoulder Pattern. Any closing above this may be brutal for the INR and for the Indian equities market. US rate hike news continuously dampens the INR, because foreign funds are moving out into the US bonds. On the other side Modi’ government is trying hard to attract the foreign funds and at some levels they succeeded too. Indian inflation is falling since last 7 months because of the Global Commodities price, also one of the positive factors for the Indian rupee. Hence overall, USDINR pair might remain in a tight range between 66.50-65.80 for the next 14 days.

Currency Insight

Sheetal

US CPI Preview: What to expect of EUR/USD?

US inflation figures gauged by the CPI are due later in the session. Market consensus sees headline consumer prices advancing 0.1% on a year to October, while the Core reading – excluding Food and Energy costs – is seen at 1.9% on a yearly basis.

Inflation, or the lack of it, has been a persistent concern amongst FOMC members against the backdrop of a potential Fed’s lift-off, most likely to be announced at the December meeting. Many of the members have already expressed their divided views on the subject, and many have also coincided that current inflation levels remain low.

Europe’s Quiet Currency War Besets Nations Losing Inflation Grip

From Stockholm, where the Riksbank will publish the minutes of its latest policy meeting on Tuesday, to Prague, Copenhagen and Zurich, officials in countries circling the currency bloc are waiting for the European Central Bank president to say next month whether he’ll expand stimulus. Only then will it be clear whether they’ll need to retaliate with more asset purchases, rate cuts and currency interventions of their own to dig in against imported disinflation.

Draghi’s bonanza of cheap cash is depressing financial returns in the euro area and driving investment flows into neighboring countries, pushing up their currencies and defeating their efforts to hit their own inflation targets. Looser monetary policy is in the cards even in countries where economic growth is strong and asset markets are overheating.

USD/JPY stabilized around 123.20

The greenback has surrendered some its initial gains vs. its Japanese counterpart on Tuesday, taking USD/JPY to the 123.25/20 band, or session lows.

Spot continues to recover from last week’s decline, managing to rebound from recent lows in the 122.30/20 band and trading at shouting distance from 3-month tops around 123.50.

Ahead in the session, USD will be in the limelight as US inflation figures measured by the CPI are due. Consensus expects consumer prices to have gained 0.1% on a year to October, while Core prices are expected at 1.9% YoY.

Important events and their explanation:
Time ( IST) Currency Economic Data Actual Expectation
12:30am USD FOMC Meeting Minutes
Tentative JPY Monetary Policy Statement
Tentative JPY BOJ Press Conference
7:00pm USD Unemployment Claims 272K 276K
8:30pm USD Philly Fed Manufacturing Index 0.1 -4.5
11:00pm USD FOMC Member Lockhart Speaks

 

Explanation:-

Quick Glance :
Instrument Price %Chg Volume OI
USD/INR 66.05 0.17 788526 960103
EUR/INR 70.44 -0.82 37048 48836
GBP/INR 100.46 0.07 21059 41217
JPY/INR 53.62 -0.64 7908 15311

 

Currency Insight

Sheetal

Dollar edges up near 2-1/2-month high ahead of Fed outcome

The dollar edged closer to a 2-1/2-month high against a basket of currencies on Wednesday as traders awaited clues from the Federal Reserve about the timing of a U.S. interest rate increase.

A rate hike at the Fed’s two-day policy meeting which ends later on Wednesday is virtually priced out due to underlying concerns over a slowdown in China and the broader impact on global growth.

But many investors still expect the Fed to indicate that interest rates could rise as early as December. The index, which gauges the greenback against six rival currencies, stood at 96.958 , up about 0.1 percent from late U.S. trade and not far from a 2 1/2-month peak of 97.201 scaled on Friday.

Europe’s Quiet Currency War Besets Nations Losing Inflation Grip

From Stockholm, where the Riksbank will publish the minutes of its latest policy meeting on Tuesday, to Prague, Copenhagen and Zurich, officials in countries circling the currency bloc are waiting for the European Central Bank president to say next month whether he’ll expand stimulus. Only then will it be clear whether they’ll need to retaliate with more asset purchases, rate cuts and currency interventions of their own to dig in against imported disinflation.

Draghi’s bonanza of cheap cash is depressing financial returns in the euro area and driving investment flows into neighboring countries, pushing up their currencies and defeating their efforts to hit their own inflation targets. Looser monetary policy is in the cards even in countries where economic growth is strong and asset markets are overheating.

China welcomes IMF backing to make yuan world reserve currency

China on Saturday welcomed backing from IMF experts that the yuan should be included in its reserve currencies, saying the move would strengthen the world’s financial system.

Now the world’s second-largest economy, China asked last year for the yuan to be added to the elite basket of SDR currencies, but until recently it was considered too tightly controlled to qualify.

Important events and their explanation:

 

Time ( IST) Currency Economic Data Actual Expectation
7:00pm USD CPI m/m 0.20% -0.20%
USD Core CPI m/m 0.20% 0.20%
7:45pm USD Capacity Utilization Rate 77.50% 77.50%
USD Industrial Production m/m 0.10% -0.20%
17th-19th USD Mortgage Delinquencies 5.30%

 

Explanation:- Out of these above data US CPI  may decide the medium term trend of the price USD.  Any positive news may be positive for the USD

Quick Glance :

 

Instrument Price %Chg Volume OI
USD/INR 66.00 0.17 788526 960103
EUR/INR 70.86 -0.82 37048 48836
GBP/INR 100.20 0.07 21059 41217
JPY/INR 53.70 -0.64 7908 15311

 

Technical touch :

EURINR

FOREX EURINR_Daily_1Year

As seen pair is trading near its crucial support levels which is at 70.56 levels. Hence we assume any breakout below 70.50 may further weaken the Euro till 70.20 levels and upside strong resistance at 71.40 levels.

 

Currency Insight

Sheetal

Dollar edges up near 2-1/2-month high ahead of Fed outcome

The dollar edged closer to a 2-1/2-month high against a basket of currencies on Wednesday as traders awaited clues from the Federal Reserve about the timing of a U.S. interest rate increase.

A rate hike at the Fed’s two-day policy meeting which ends later on Wednesday is virtually priced out due to underlying concerns over a slowdown in China and the broader impact on global growth.

But many investors still expect the Fed to indicate that interest rates could rise as early as December. The index, which gauges the greenback against six rival currencies, stood at 96.958 , up about 0.1 percent from late U.S. trade and not far from a 2 1/2-month peak of 97.201 scaled on Friday.

Europe’s Quiet Currency War Besets Nations Losing Inflation Grip

From Stockholm, where the Riksbank will publish the minutes of its latest policy meeting on Tuesday, to Prague, Copenhagen and Zurich, officials in countries circling the currency bloc are waiting for the European Central Bank president to say next month whether he’ll expand stimulus. Only then will it be clear whether they’ll need to retaliate with more asset purchases, rate cuts and currency interventions of their own to dig in against imported disinflation.

Draghi’s bonanza of cheap cash is depressing financial returns in the euro area and driving investment flows into neighboring countries, pushing up their currencies and defeating their efforts to hit their own inflation targets. Looser monetary policy is in the cards even in countries where economic growth is strong and asset markets are overheating.

Rupee trades higher against US dollar

Snapping its 7 day losing streak, the rupee appreciated by 4 paise to 66.40 against the US dollar on Tuesday morning, tracking gains seen in other Asian currencies.

The domestic currency had dropped 68 paise to close at a nearly eight-week low of 66.44 against the greenback in the previous session on persistent dollar demand from banks and importers.

Important events and their explanation:
Time ( IST) Currency Economic Data Actual Expectation Previous
5:20am JPY Current Account 0.78T 1.50T 1.59T
7:00am CNY CPI y/y 1.30% 1.50% 1.60%
  CNY PPI y/y -5.90% -5.90% -5.90%
 1:00pm USD FOMC Member Evans Speaks      
7:00pm USD Import Prices m/m   -0.10% -0.10%
           

 

Quick Glance :
Instrument Price %Chg Volume OI
USD/INR 66.35 0.17 788526 960103
EUR/INR 71.20 -0.82 37048 48836
GBP/INR 100.92 0.07 21059 41217
JPY/INR 53.78 -0.64 7908 15311

 

Technical touch :

USDINR

FOREX USDINR_Daily_2Year

Pair is trading near crucial resistance of 66.30 levels , any close above 66.50 is bullish for the Pair till 66.80 levels. Below 66.20 would act as an important support

Diwali picks

Sheetal

 

Sr no. Date recommended Name Reco price Target  SL % Return
1 6-Nov-15 IFCI 25.1 30 22 18%
2 6-Nov-15 HCL INSYS 51-52 63 44 22%
4 6-Nov-15 MOIL 210-211 250 190 19%
5 6-Nov-15 UNICHEM LAB 270 240 322 20%

 

IFCI

NSE IFCI EQ_Daily_1Year

As seen stock is forming a bullish flag in a daily chart which is perfectly matching volume principle. Hence one can Buy near 25.10 levels with an upside move till 29.9-33 levels.

HCL INSYS

NSE HCL-INSYS EQ_Daily_1Year

As seen stock is forming a bullish flag in a daily chart which is perfectly matching volume principle. Hence one can Buy at 51-52  levels with an upside move till 62-68 levels.

MOIL

NSE MOIL EQ_Weekly_1Year

After a steep fall, finally price and volume had given some positive news. Volume gained 5x above its last 12 months average volume. Price also trading above its 10 weeks SMA.

UNICHEM LAB

NSE UNICHEMLAB EQ_Daily_1Year

After piercing its prolonged range band, price retrace down till its support line . Hence one can buy at 269-270 with an upside move till 338-350 levels.

Currency Insight

Sheetal

Dollar edges up near 2-1/2-month high ahead of Fed outcome

The dollar edged closer to a 2-1/2-month high against a basket of currencies on Wednesday as traders awaited clues from the Federal Reserve about the timing of a U.S. interest rate increase.

A rate hike at the Fed’s two-day policy meeting which ends later on Wednesday is virtually priced out due to underlying concerns over a slowdown in China and the broader impact on global growth.

But many investors still expect the Fed to indicate that interest rates could rise as early as December. The index, which gauges the greenback against six rival currencies, stood at 96.958 , up about 0.1 percent from late U.S. trade and not far from a 2 1/2-month peak of 97.201 scaled on Friday.

Indian rupee ends at one-month low against US dollar, down 32 paise at 65.59

The rupee plunged by 32 paise against the US dollar to one-month low of 65.59 on fresh demand for the American currency from banks and importers amid persistent fall in equity markets coupled with strong foreign capital outflows.

 

The domestic unit opened lower at 65.39 as against last Friday’s level of 65.27 at the Interbank Foreign Exchange (forex) market and dropped further to 65.62 before ending at one-month low of 65.59, showing a loss of 32 paise or 0.49 per cent.

Sterling trades above $1.52, but lags euro on soft UK data

Sterling rose 0.4 percent against a struggling dollar on Tuesday, as investors fretted about when the U.S. Federal Reserve will raise interest rates amid growing doubts over a global recovery.

The International Monetary Fund (IMF) cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and said policies aimed at increasing demand were needed.

Important events and their explanation:
Time ( IST) Currency Economic Data Actual Expectation Previous
USD FOMC Member Lockhart Speaks
7:00pm USD Average Hourly Earnings m/m 0.20% 0.00%
USD Non-Farm Employment Change 179K 142K
USD Unemployment Rate 5.00% 5.10%

 

Quick Glance :
Instrument Price %Chg Volume OI
USD/INR 65.48 0.17 788526 960103
EUR/INR 71.56 -0.82 37048 48836
GBP/INR 100.92 0.07 21059 41217
JPY/INR 54.01 -0.64 7908 15311

 

Technical touch :

FOREX USDINR_Weekly_3Year

We assume USD might depreciate and INR till 65.50

 

Currency Insight

Sheetal

Dollar edges up near 2-1/2-month high ahead of Fed outcome

The dollar edged closer to a 2-1/2-month high against a basket of currencies on Wednesday as traders awaited clues from the Federal Reserve about the timing of a U.S. interest rate increase.

A rate hike at the Fed’s two-day policy meeting which ends later on Wednesday is virtually priced out due to underlying concerns over a slowdown in China and the broader impact on global growth.

But many investors still expect the Fed to indicate that interest rates could rise as early as December. The index, which gauges the greenback against six rival currencies, stood at 96.958 , up about 0.1 percent from late U.S. trade and not far from a 2 1/2-month peak of 97.201 scaled on Friday.

Indian rupee ends at one-month low against US dollar, down 32 paise at 65.59

The rupee plunged by 32 paise against the US dollar to one-month low of 65.59 on fresh demand for the American currency from banks and importers amid persistent fall in equity markets coupled with strong foreign capital outflows.

 

The domestic unit opened lower at 65.39 as against last Friday’s level of 65.27 at the Interbank Foreign Exchange (forex) market and dropped further to 65.62 before ending at one-month low of 65.59, showing a loss of 32 paise or 0.49 per cent.

Sterling trades above $1.52, but lags euro on soft UK data

Sterling rose 0.4 percent against a struggling dollar on Tuesday, as investors fretted about when the U.S. Federal Reserve will raise interest rates amid growing doubts over a global recovery.

The International Monetary Fund (IMF) cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and said policies aimed at increasing demand were needed.

Important events and their explanation:
Time ( IST) Currency Economic Data Actual Expectation Previous
1:00am USD FOMC Member Dudley Speaks
5:20am JPY Monetary Policy Meeting Minutes
6:00am USD FOMC Member Fischer Speaks
7:00pm USD Unemployment Claims 263K 260K
USD FOMC Member Dudley Speaks
USD Prelim Nonfarm Productivity q/q 0.10% 3.30%
USD Prelim Unit Labor Costs q/q 2.20% -1.40%
7:40pm USD FOMC Member Fischer Speaks

 

Explanation:- Market is heading towards one of the most crucial events of the weeks, Unemployment claims and Non farm we actual data might come negative for the USD.

Quick Glance :
Instrument Price %Chg Volume OI
USD/INR 65.48 0.17 788526 960103
EUR/INR 71.56 -0.82 37048 48836
GBP/INR 100.92 0.07 21059 41217
JPY/INR 54.01 -0.64 7908 15311

 

Technical touch :

USDINR

FOREX USDINR_Daily_1Year

As seen pair has pierced its prolonged Ascending triangle and trading above crucial 65.20 levels.

After a surprise move by the Chinese banks rupee depreciated and touched 64.80 levels.  We assume rupee to form a minor resistance at 65.60 levels.

Once can go long TILL 65.70 LEVELS.

Currency Insight

Sheetal

China gives currency largest boost in a decade

China on Monday raised the daily reference rate for its yuan currency by the largest margin in a decade, officials and reports said, just three months after a surprise devaluation sent shockwaves through global markets.

The central People’s Bank of China adjusted the central rate of the yuan — also known as the renminbi (RMB) — upwards by 0.54 percent against the US dollar, according to a statement.

China now allows the currency to trade up or down two percent from the centrally set daily rate on the domestic foreign exchange market.

EUR/USD off lows but below 1.10

The euro lost ground on Wednesday as data showing euro zone inflation dipped back into negative territory in September fuelled expectations the European Central Bank will expand or extend its asset purchase programme.

The euro fell 0.4 percent to $1.1205, and was down 0.7 percent against the British pound, although it remained on track for a quarterly gain against the dollar.

“A weak number was expected and bolsters expectations that the ECB may have to expand its asset purchase programme from the 60-billion-euros-a-month to something larger, perhaps by year-end,” said Richard Falkenhall, currency strategist at SEB.

“That is negative for the euro, but a lot depends on how stock markets behave. If stocks drop, then the euro is likely to be supported as they are going in opposite ways.”.

Sterling trades above $1.52, but lags euro on soft UK data

Sterling rose 0.4 percent against a struggling dollar on Tuesday, as investors fretted about when the U.S. Federal Reserve will raise interest rates amid growing doubts over a global recovery.

The International Monetary Fund (IMF) cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and said policies aimed at increasing demand were needed.

Important events and their explanation:
Time ( IST) Currency Economic Data Actual Expectation Previous
12:30am EUR ECB President Draghi Speaks      
7:15am CNY Caixin Services PMI     50.5
4th-9th GBP Halifax HPI m/m   0.70% -0.90%
2:30pm EUR ECB President Draghi Speaks      
3:00pm GBP Services PMI   54.6 53.3
4:00pm USD FOMC Member Brainard Speaks      
6:45pm USD ADP Non-Farm Employment Change   183K 200K
7:00pm USD Trade Balance   -42.7B -48.3B
8:30pm USD Fed Chair Yellen Testifies      
  USD ISM Non-Manufacturing PMI   56.6 56.9
9:00pm USD Crude Oil Inventories   2.5M 3.4M

 

Explanation:- Market may pay more attention to Fed Yellen testify and ISM Non manufacturing index. We assume above data to come as per the expectation which might be negative for the USD.

Quick Glance :
Instrument Price %Chg Volume OI
USD/INR 65.68 0.17 788526 960103
EUR/INR 72.09 -0.82 37048 48836
GBP/INR 101.23 0.07 21059 41217
JPY/INR 54.39 -0.64 7908 15311

 

Technical touch :

FOREX USDINR_Daily_1Year

Pair is trading near crucial resistance area. Any closing above 65.70 may further push the pair till 65.90 levels. Below this may fall till 65.40 levels.