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28 November 2022
Monday
Rising Covid19 infections from China and the protests to ease the Zero-Covid19 policy may challenge the market sentiment.
Rupee opened lower this morning amid lackluster trend in domestic equity markets and over all stronger dollars. However, easing crude price has supported rupee for mean time but rising virus infections from China and the protests to ease the Zero-Covid19 policy seemed to challenge the market sentiment of late which may further affect rupee. The quarterly economic growth rate which is scheduled to release this week will be the key factor to watch out. And if report has be believed than market experts expect the economy to grow more than 6 percent in the September FY23 ended quarter (Q2CY22), lower compared to growth rate of 13.5 percent recorded in previous quarter (on a low base due to Covid-led lockdown in Q1FY22), supported by pent-up demand and economic activity normalization. It is expected that India’s GDP for Q2FY23 to rise by 6.4 percent YoY, as resilient domestic backdrop and pent-up demand continued to prop up India's growth, especially in the tertiary sector, even though external headwinds rose through the quarter. Going ahead data domestic releases such as GDP, fiscal deficit along with manufacturing PMI data will be important factor which may further decide rupee future for near term. Also, along with this upcoming speech from Fed Chair Jerome would drive markets this week. Market participants may look for cues on further rate hikes in December after FOMC meeting minutes hinted that the rate hike cycle may be slowing down.
On International Front, China tweaks to the zero-covid policy led to more widespread outbreaks triggering restrictions in more than a third of China’s provinces. China could be facing a chaotic winter as it is hard to contain covid without reacting fast and forceful. Unless, they are willing to live with more spread of the virus, the result could eventually be harsh lockdowns during the winter to knock down the covid waves. Also there is action-packed week for Europe this, with a plethora of key economic data like Mfg. PMI data, Flash CPI, German Retail sales amid ECB policymaker appearances. In the run-up to the ECB rate decision on 15 December, that commentary is going to provide crucial insight into which way the committee is leaning, with another 75 basis points currently heavily priced in. With that in mind, the flash CPI release stands out as the one to watch on Wednesday.
The correction in oil prices was one of reasons for strengthening market sentiment last week as it raises hope for ease in inflation and fiscal deficit concerns along with improving margin pressure for corporates. Also the RBI may heave a sigh of relief as the rate hike pace may be slowed down.
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Trading currency involves the right combination of awareness, preparation and action. Over the last thirty years, Mecklai Financial has equipped corporate treasury managers and CFO’s in India’s with actionable advice to optimally manage their market risk .Mecklai will give you the right information, analysis, and updates for traded currency future pairs.
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The service will highlight potential trades in currencies with the trading calls rendered through SMS for timely execution. The SMS will mention entry price range, stop loss levels and the expected target zones.
SAMPLE SMS
- Buy USD/INR Dec at 62.05 for target 62.20. Stop loss of 61.95
- Sell EUR/INR Nov at 77.10 for target 76.90. Stop loss 77.25
- Buy GBP/INR Nov at 97.85 for target 98.10. Stop loss 97.70
- Sell JPY/INR 52.85 for target 52.52. Stop loss 53.03
Recommendations are provided for short term and positional trading with entry level and stop loss.
WEEKLY ROUNDUP REPORT
The weekly roundup report will provide detailed insights on the current and future trends in currencies and related commodities like gold and oil. Additionally, it will outline the trend and trading opportunities in the week ahead.
Newsletter Sections-content Snapshot
The weekly mailer gives you a smart perspective on how global and domestic events will impact your currency trading with snippets on gold and oil. In addition the charts and the technical levels for each of the four currency pairs (USD/INR, EUR/INR, GBP/INR, JPY/INR) give you firm levels to enter and exit positional trades with optimum risk.
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Rupee on a down trend on emerging market sentiment : US Equities lead the way.
12.58 PM
USD/INR ARBITRAGE on Aug 21, 2015
TECHNICAL SUPPORTS AND RESISTANCES (AUG 24–28)
USD/INR TECHNICALS
In our previous comment we had mentioned that, USD/INR continues to move in a positive formation and it is moving with an upward bias. As far as prices are moving crossing its previous highs the probability for the pair to test the level of 66 is likely with support placed at 64.80 levels.
Prices made a high of 66.01 last week thus achieving our mentioned level. The bias still is positive and can move higher till 66.50 levels in the current week. The support now will be at 65.40 on the downside.
EUR/INR TECHNICALS
In our previous comment we had mentioned that, prices are on the brink to cross its previous high which will open positive possibilities which will push prices higher till 74 levels going ahead. The pair has protected its previous low and will probably make ne immediate high. RSI is above 50 which gives positive signal.
Prices crossed its previous high thus achieving our mentioned level of 74. Prices closed above the 50 SMA which opens further positive possibility. The revised target will be 75 for next week with support placed at 73.80 levels.
GBP/INR TECHNICALS
In our previous comment we had mentioned that GBP /INR bounced from the support of the moving average and it shows a perfect example of a bullish moving average crossover which is a positive sign. Prices are making a higher highs and higher lows which is a positive formation. It can test the level of 102.50 in near term with support at 101 levels.
It made a high of 103.67 levels thus achieving our level of 102.50. The overall outlook continues to be positive with the target of 105 in coming week. The support will be at 102.50 levels on downside.
JPY/INR TECHNICALS
Prices broke the rectangle pattern which opens positive possibility. The over all outlook continues to be positive as the pair can move to 55 levels in the near term. The support will be at 52 levels on the down side. However, RSI is inching towards 70 but MACD has given a fresh buy signal.
GLOBAL OUTLOOK (AUG 24–28)
ECONOMIC DATA RELEASES (AUG 24–28)
FX MARKETS
RBI rate cut rumors vanished at the start of the week with the continued depreciation of the rupee being the key story. Experts opined that a rate cut at the time of sharp depreciation across emerging currencies in Asia a rate cut would not work well. The RBI chief, speaking at a banking conclave, was upbeat on growth citing a good monsoon was likely to see a tick up in rural demand and reiterated there was a room for rate cuts going ahead, provided there was further transmission of rates by banks. However the MOF is probably likely to continue to apply pressure for early rate cuts as growth momentum remains muted. .Stock markets were pressured by the risk off sentiment across markets as outflows from emerging markets continued to tick up. Domestic yields climbed at the end of the week, with the ten year benchmark yield at 7.77% against 7.75% at the start of the week. Today it has opened at 7.83%. Meanwhile IMF has downgraded India growth forecast this year to 7% against the earlier 7.5%.
DXY slipped below its range over the last two weeks, as experts raised concerns on troubles in emerging market economies likely to raise the scepter of global deflation if it continued for longer. In the light of that, it would be difficult for the FED to effect, the token increase in US interest rates this year which was largely expected. This realization seems to have turned the market on its head with investors moving into a risk off mode with equities across the globe at record low levels. The S&P 500, has, for instance, given up all its gains in this year. This is despite the fact that the US data remains close to expectation or better. Housing data was mostly better than expected with US Housing starts at an 8 year high. However jobless claims ticked up by 5000 to 277K and CB leading index fell to -0.2% against the earlier reading of 0.6%. Flash manufacturing PMI was at 52.9 versus 53.8.
The Euro climbed higher, moving above 1.12 at the end of the week and opened at 1.45 at the start of the week, as it appreciated against the dollar as did the Yen and CHF on possible unwinding of carry trades. Data from the Eurozone remained close or better than expectations this week, but was ignored in light of the lack of movement in GDP and CPI data. Eurozone current account surplus improved to $25.4 billion even as the Greek PM Tspiras resigned at the weekend, with hopes of coming back stronger in a snap election to be held on Sep 20. He faces strong opposition from the members of his own party, despite the fact that Greece has received parliamentary approval for its third bail out plan. The PMI numbers across the Eurozone weres better except for French manufacturing PMI which stayed below the expansion point of 50 at 48.6.
The Yen stayed higher, moving down only at the end of the week on safe haven buying on account of troubles in China as the Caixin Manufacturing PMI came in at 47.8 versus an expectation of 48.2. Chinese equity markets continue to fall even though the Yuan depreciation of the previous week has stabilized, with higher fixings for Yuan through the latter half of last week. However the risk off sentiment it has set off seems to have a mind of its own and there does not seem any let up in capital outflows from China and other emerging markets, despite the fact the dollar has actually become weaker this week.
The outlook on oil and commodities continues to hinge on China as commodity currencies come under increasing pressure. A small window on US exports of oil creaked open with the government allowing US oil companies to do a 1:1 swap of light sweet crude with Mexican oil companies doing refinery operations. However the protectionist lobby on oil remains strong and it is unlikely that much other leeway will happen in a hurry. The Middle East continues to pump output at record levels and with Iran coming on stream, investors worry about a supply glut at a time of falling demand. Inventories in the US are continuing to climb as the driving season in the US comes to an end. Currently Crude quotes at $ 40.89 and Brent is close to $44.70.
Gold moved higher on safe haven buying as global equities tanked with Dow falling to 10% over the week accompanied by falling yields across emerging markets. Gold moved up sharply to trade at $1158 and is likely to keep climbing as VIX Index’s move higher across the globe.
MARKETS LAST WEEK (Aug 17-21)
| PAIR | EXPIRY | OPEN | HIGH | LOW | CLOSE | % CHG |
| USD/INR | 27th Aug 15 | 65.27 | 66.01 | 65.21 | 65.94 | 1.24 |
| EUR/INR | 27th Aug 15 | 72.35 | 74.47 | 71.90 | 74.34 | 2.09 |
| GBP/INR | 27th Aug 15 | 101.99 | 103.67 | 101.99 | 103.32 | 1.44 |
| JPY/INR | 27th Aug 15 | 52.46 | 53.86 | 52.43 | 53.78 | 1.72 |
| FUTURES | RBI REF RATE 21/08/2015 | OPEN INTEREST Aug 2015) |
VOLUME (ALL CONTRACTS ) |
VOLUME (RS. CRORE) |
|
| USD/INR | 65.94 | 65.8298 | 24,34,412 | 74,19,600 | 48,692.98 |
| EUR/INR | 74.34 | 74.2692 | 89,346 | 299,834 | 21914.08 |
| GBP/INR | 103.32 | 103.3897 | 65,761 | 208,845 | 2083.08 |
| JPY/INR | 53.78 | 53.5500 | 12,757 | 67,510 | 358.08 |
USD/INR ARBITRAGE on Aug 21, 2015
| SPOT | 1 MONTH | 2 MONTH | 3 MONTH | |
| NDF | 65.86 | 66.28 | 66.56 | 66.90 |
| FORWARDS | 65.80 | 65.89 | 66.26 | 66.64 |
| FUTURES | 65.94 | 66.30 | 66.65 |
TECHNICAL SUPPORTS AND RESISTANCES (AUG 24–28)
| PIVOT | S2 | S1 | R1 | R2 | Outlook | |
| USD/INR | 64.85 | 64.92 | 65.43 | 66.23 | 66.52 | UP |
| EUR/INR | 71.94 | 71.00 | 72.67 | 75.24 | 76.14 | UP |
| GBP/INR | 100.98 | 101.31 | 102.32 | 104.00 | 104.67 | Up |
| JPY/INR | 52.02 | 51.93 | 52.85 | 54.28 | 54.79 | UP |
USD/INR TECHNICALS
In our previous comment we had mentioned that, USD/INR continues to move in a positive formation and it is moving with an upward bias. As far as prices are moving crossing its previous highs the probability for the pair to test the level of 66 is likely with support placed at 64.80 levels.
Prices made a high of 66.01 last week thus achieving our mentioned level. The bias still is positive and can move higher till 66.50 levels in the current week. The support now will be at 65.40 on the downside.
EUR/INR TECHNICALS
In our previous comment we had mentioned that, prices are on the brink to cross its previous high which will open positive possibilities which will push prices higher till 74 levels going ahead. The pair has protected its previous low and will probably make ne immediate high. RSI is above 50 which gives positive signal.
Prices crossed its previous high thus achieving our mentioned level of 74. Prices closed above the 50 SMA which opens further positive possibility. The revised target will be 75 for next week with support placed at 73.80 levels.
GBP/INR TECHNICALS
In our previous comment we had mentioned that GBP /INR bounced from the support of the moving average and it shows a perfect example of a bullish moving average crossover which is a positive sign. Prices are making a higher highs and higher lows which is a positive formation. It can test the level of 102.50 in near term with support at 101 levels.
It made a high of 103.67 levels thus achieving our level of 102.50. The overall outlook continues to be positive with the target of 105 in coming week. The support will be at 102.50 levels on downside.
JPY/INR TECHNICALS
Prices broke the rectangle pattern which opens positive possibility. The over all outlook continues to be positive as the pair can move to 55 levels in the near term. The support will be at 52 levels on the down side. However, RSI is inching towards 70 but MACD has given a fresh buy signal.
GLOBAL OUTLOOK (AUG 24–28)
|
|
SPOT | PR. CLOSE | % CHANGE | S2 | S1 | R1 | R2 |
| EURUSD | 1.1278 | 1.1173 | 0.94 | 1.0800 | 1.1000 | 1.1400 | 1.1500 |
| GBPUSD | 1.5677 | 1.5636 | 0.26 | 1.5250 | 1.5410 | 1.5710 | 1.5900 |
| USDJPY | 122.72 | 124.08 | -1.10 | 120.00 | 121.00 | 123.50 | 125.00 |
| Gold | 1153 | 1119 | 3.04 | 1070 | 1130 | 1170 | 1200 |
| Silver | 15.4 | 15.47 | -0.45 | 13.90 | 14.50 | 15.50 | 15.80 |
| WTI | 41.14 | 42.28 | -2.70 | 38.00 | 40.00 | 45.50 | 47.00 |
ECONOMIC DATA RELEASES (AUG 24–28)
| DATA RELEASES | FORECAST | PREVIOUS | IMPACT |
|---|---|---|---|
| August 25 , Tuesday | |||
| German Final GDP q/q | 0.4% | 0.4% | Medium |
| France Employment Level | 4.24M | 4.23M | Medium |
| German Ifo Business Climate | 107.6 | 108 | Medium |
| U.S HPI m/m | 0.4% | 0.4% | Medium |
| U.S S&P/CS Composite-20 HPI y/y | 5.1% | 4.9% | Medium |
| U.S Flash Services PMI | 54.1 | 55.7 | Medium |
| CB Consumer Confidence | 92.8 | 90.9 | Medium |
| U.S New Home Sales | 512K | 482K | Medium |
| U.S Richmond Manufacturing Index | 9 | 13 | Medium |
| August 26 , Wednesday | |||
| Aus Construction Work Done q/q | -1.50% | -2.40% | Medium |
| RBA Gov Stevens Speaks | Medium | ||
| France UBS Consumption Indicator | 1.68 | Medium | |
| U.K BBA Mortgage Approvals | 46.0K | 44.5K | Medium |
| U.K CBI Realized Sales | 19 | 21 | Medium |
| U.S Core Durable Goods Orders m/m | 0.30% | 0.60% | Medium |
| U.S Durable Goods Orders m/m | -0.50% | 3.40% | Medium |
| FOMC Member Dudley Speaks | Medium | ||
| U.s Crude Oil Inventories | 2.6M | Medium | |
| August 27 , Thursday | |||
| Aus Private Capital Expenditure q/q | -2.50% | -4.40% | Medium |
| German Import Prices m/m | -0.30% | -0.50% | Medium |
| U.K Nationwide HPI m/m | 0.40% | 0.40% | Medium |
| Euro M3 Money Supply y/y | 4.90% | 5.00% | Medium |
| Euro Private Loans y/y | 0.70% | 0.60% | Medium |
| U.S Prelim GDP q/q | 3.20% | 2.30% | High |
| U.S Unemployment Claims | 275K | 277K | Medium |
| U.S Prelim GDP Price Index q/q | 2.00% | 2.00% | Medium |
| U.S Pending Home Sales m/m | 1.30% | -1.80% | High |
| U.S Natural Gas Storage | 53B | Medium | |
| August 28 , Friday | |||
| U.K GfK Consumer Confidence | 4 | 4 | Medium |
| Japan Household Spending y/y | 0.90% | -2.00% | Medium |
| Japan Tokyo Core CPI y/y | -0.10% | -0.10% | Medium |
| Japan National Core CPI y/y | -0.20% | 0.10% | Medium |
| Japan Unemployment Rate | 3.40% | 3.40% | Medium |
| Japan Retail Sales y/y | 1.10% | 1.00% | Medium |
| France GDP q/q | -0.10% | -0.20% | Medium |
| German Prelim CPI m/m | -0.10% | 0.20% | Medium |
| Spanish Flash CPI y/y | -0.10% | 0.10% | Medium |
| U.K Second Estimate GDP q/q | 0.70% | 0.70% | Medium |
| U.K Prelim Business Investment q/q | 1.60% | 2.00% | Medium |
| U.K Index of Services 3m/3m | 0.40% | Medium | |
| Italian 10-y Bond Auction | Medium | ||
| U.S Goods Trade Balance | -62.3B | Medium | |
| U.S Core PCE Price Index m/m | 0.10% | 0.10% | Medium |
| U.S Personal Spending m/m | 0.40% | 0.20% | Medium |
| U.S Personal Income m/m | 0.40% | 0.40% | Medium |
| U.S Revised UoM Consumer Sentiment | 93.2 | 92.9 | Medium |
| U.S Revised UoM Inflation Expectations | 2.80% | Medium |
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