Union Budget of India and the FOMC Monetary Policy Statement that shall release in the latter part of the week i.e. 1st February'18. Rupee could trade in a range between 63.30 to. 63.85 levels during this time frame. Starting with the Union Budget, investors and traders are expecting this year's Budget to be a populist one ...
Contents For the week ended 22nd Jan – 26th Jan 2018
DOMESTIC MARKET Dollar Rupee Forward Market
INTERNATIONAL MARKET Euro Pound Sterling Yen Gold Market
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Domestic Market Weekly wrap up:
Domestic Market Rupee closed the week at 63.5450 levels. FX Reserves increased to $414.78 bln from $413.83 bln as on 19th Jan 2018.
This week the Indian Rupee traded in a volatile manner with a bias towards positive side. It started off the week at 63.88 levels and made a weekly low of 64.00 levels on the same day itself as investors remained cautious ahead of a Senate vote on a stopgap funding for federal agencies after a disagreement between the US president Donald Trump and Democrats over immigration which forced a government shutdown. However, the situation got in control on the next day and Rupee traded on a calm mode after the US Senators struck a deal to end a three-day government shutdown. Also, the IMF revised up its forecast for world economic growth for the year 2018 and 2019 that kept the global and local markets positive in turn helping the Indian Rupee to stay supportive. The remaining two trading days saw the appreciation of the Indian Rupee the most on back of global dollar weakness amid renewed speculation that the European central bank may consider tightening at its policy meeting that was to be released on Friday. Furthermore, the US Treasury Secretary Steven Mnuchin commented on weaker greenback being good for trade which further acted as a positive factor for the Rupee. The Indian Rupee made a weekly high of 63.45 levels on the last trading day of the week and closed the week at 63.5450 levels.
For the week 29th Jan – 02nd Feb 2018
Going Forward: Next week shall keep the markets a bit volatile as investors brace themselves for the two most important events of the week i.e. the Union Budget of India and the FOMC Monetary Policy Statement. The Indian Rupee shall face the brunt of these events making it swing from 63.20 levels to 64.00 levels throughout the week. After appreciating this week, the Indian Rupee is all set to trade in a volatile manner in the coming week. The early few days of the week shall not see much movement in the Rupee as investors shall stay cautious ahead of the two most important events i.e. the Union Budget of India and the FOMC Monetary Policy Statement that shall release in the latter part of the week i.e. 1st February’18. Rupee could trade in a range between 63.30 to 63.85 levels during this time frame. Starting with the Union Budget, investors and traders are expecting this year’s Budget to be a populist one considering this is the one shot moment that the BJP government shall get to woo the common people for the long list of State elections this year and next year’s General Election. The prime focus shall primarily be on the rural and capex spending to boost sentiment and revive growth further. Also, as GST related dust is settling down the markets shall pay attention to the fiscal deficit target. All in all, the budget should basically strike a right balance between good economics and good politics. The future direction of rupee and local equities shall depend on the Finance Minister’s approach towards the Fiscal Deficit and to what extent he is able to strike a balance between a populist and reformist budget. Rupee could move in tandem based on the same and see moves in range of 63.20-64.00 levels with the direction based on the outcome of the budget. On the other hand, the FOMC Monetary Policy would not see any policy change however since it’s the last one with the US Fed Chair Janet Yellen as the head, markets shall pay close attention to her speech and take cues on whether or not the next Chairman would hike rates sooner or later. Any unusual comment or move in these two events shall have an influence on the Indian currency accordingly. There shall be bouts of spark seen post these events. Advise: Exporters are advised to wait with a strict stop loss of 63.20 levels and cover their near to mid term receivables on spikes towards 63.80-64.00 levels. Importers are advised to cover their short term payable on dips towards 63.35-63.40 levels and wait for further coverage if 63.20 levels breaks on downside.
For the week 29th Jan – 02nd Feb 2018
Forward Market 6 - month Premium (in Paisa)
Domestic Market Likely to move lower
6 month forward premia opened the week at 141.00 paisa and initially dipped lower to 140.00 paisa. During the week, the 6 month forward premia moved in a narrow range between 140.00 and 143.00 paisa. 6 month forward premia ended the week at 141.75 paisa. Going Forward: 6 month forward premia is facing stiff resistance at 143.50 paisa while is unale to break higher. On the flipside, the 6 month premia is well supported at 140.00 paisa. Only a break on either side would open the gateway for a swift move towards 146.50 and 138.00 paisa. Technical indicators are signalling a bearish momentum. Key Support: 140.00, 138.00, 136.50 Key Resistance: 143.50, 146.50, 150.00
For the week 29th Jan – 02nd Feb 2018
International Markets EUR/USD Euro closed the week at 1.2419 levels.
Technical Likely to move lower initially
Euro: The Euro was the most volatile this week and was on a continuous rise through the week. The shared currency started off the week at 1.2266 levels and immediately made a weekly low of 1.2212 levels and picked up thereafter on back of global dollar weakness on account of US Government shutdown which gave a boost to the Euro currency. Since then the Euro currency has been trading higher. Also, renewed speculation that the European central bank may consider tightening at its policy meeting that was to be released later in the week which further acted as a positive factor. Moreover, the US Treasury Secretary Steven Mnuchin commented on weaker greenback being good for trade which further dented the demand for the American currency in turn giving a boost to the shared currency i.e. Euro. The currency pair moved above 1.2450 levels. In the ECB Monetary Policy Meeting the committee kept the rates unchanged and indicated that the bank shall keep its stimulus for as long as needed and stated that there are very chances that it will change interest rates this year. However, he used the same wording back in September — a repetition that markets perceived as a lack of concern over the strength of the euro and thus an indication that the ECB will end up tightening its policy. This led to sharp rise in Euro to its weekly high of 1.2536 levels. On the last trading day, profit booking in the long rally led to some pullback in Euro which closed the week at 1.2419 levels. Technical Outlook:
Upcoming Events
Prelim Flash GDP q/q Unemployment Rate Final Manufacturing PMI PPI m/m Prelim CPI m/m(DE) Retail Sales m/m(DE) Unemployment Change(DE) Final Manufacturing PMI(DE)
Week ahead: Cross has formed a bearish pattern on the daily chart while still is giving a bullish close on the weekly chart signalling a downmove initially towards 1.2360 and 1.2300 levels. A convincing break and close below the same shall push it to 1.2220 levels. However, taking support at these levels the cross could resume its upmove targeting 1.2480 and 1.2540 levels. Further resistance lies at 1.2650 levels. Technical indicators are signalling a bearish momentum. Key Support: 1.2360, 1.2300, 1.2220, 1.2150 Key Resistance: 1.2480, 1.2540, 1.2650 Advise: Importers are advised to cover their very near term payables on dips towards 1.2250 levels. Exporters are advised to cover their short term receivables in a staggered manner on spikes towards 1.2480 and wait for better levels.
For the week 29th Jan – 02nd Feb 2018
International Markets GBP/USD GBP closed the week at 1.4168 levels.
Technical
Sterling: The British Currency opened the week at 1.3878 levels and briefly moved lower to print a weekly low of 1.3855 levels, thereafter, the Pound kept on strengthening throughout the week. A plunge in the American currency on back of US government shutdown boosted the demand for the Pound. Also, the CBI Industrial orders came in little better then the expectations while the claimant count change followed by UK unemployment rate printed a subdued and flat readings respectively. The Cabel currency surged above 1.4200 levels on account of the optimism surrounding the Brexit Negotiations, which acted as a positive factor. Apparently Spain and Netherlands have asked the EU commission to not make things difficult for Britain and give them softer Brexit instead. Additionally, hopes that Britain will soon agree a transition deal with Brussels too supported the appreciation in Pound. Furthermore, the US Treasury Secretary Steven Mnuchin commented on weaker greenback being good for trade, which dented the demand for the American currency and pushed the Cable higher. The ECB, in its monetary policy meet on thursday, kept the key interest rates unchanged, where the Dollar was a big loser of the event, but we note the British Pound has taken advantage of the Dollar's latest woes and has riden the Euro's coattails and pushed to fresh multi-month highs, touching 1.4344 levels. However, profit booking in the cabel currency pushed it again lower towards 1.4100 levels. On the last trading day of the week, the Pound again surged to 1.4285 levels with the robust release of UK GDP data printing a reading of 0.5 percent from 0.4 percent. The Pound ended the week at 1.4168 levels. Technical Outlook:
Likely to move higher after a correction
Upcoming Events
GfK Consumer Confidence Nationwide HPI m/m Manufacturing PMI Construction PMI
Week ahead: Cross has given a bearish close on the daily charts while is still signaling a bullish move on the weekly charts signaling a downmove initially towards 1.4080 and 1.3950 levels. Taking support at these levels, the pair could resume its upmove targeting 1.4350 levels. A convincing break and close above the same shall push it to 1.4500 levels. Technical indicators are signalling the same bullish momentum but RSI is signalling caution on the upmove. Key Support: 1.4080, 1.3950, 1.3830 Key Resistance: 1.4260, 1.4350, 1.4500 Advise: Importers are advised to cover their near term payables on dips towards 1.3950 levels. Exporters are advised to cover their near term receivables in a staggered manner on spikes towards 1.4350 and 1.4500 levels.
For the week 29th Jan – 02nd Feb 2018
International Markets USD/JPY Yen closed the week at 108.70 levels.
Technical Likely to move lower
Upcoming Events
Household Spending y/y Unemployment Rate Retail Sales y/y BOJ Core CPI y/y BOJ Summary of Opinions Prelim Industrial Production m/m Consumer Confidence Housing Starts y/y Final Manufacturing PMI Monetary Base y/y
Japanese Yen: The Japanese unit opened the week at 110.61 levels and weakened towards its weekly low at 111.22 levels after the Bank of Japan announced it was keeping its monetary policy steady, a move that was in line with market expectations. In a statement released following the conclusion of its two-day meeting, the BOJ said it would keep the shortterm policy rate unchanged at negative 0.1 percent and the 10-year yield target around 0.0 percent. The BOJ also noted it would continue with "quantitative and qualitative monetary easing with yield curve control" for "as long as it is necessary" to achieve its 2 percent inflation target. However, the Japanese unit soon began to strengthen after the dollar touched a four-month low pressured by simmering concerns that the U.S. currency's yield advantage will start to erode as major central banks head toward unwinding their massive stimulus. Further, the Yen continued to trade on a stronger note and moved towards 108.50 levels after the U.S. Treasury secretary said he welcomed weakness in the currency, and as investors worried about U.S. President Donald Trump's protectionist agenda. However, the Japanese unit weakened to 109.77 levels after comments by US President Donald Trump saying that the US actually favours a strong dollar, stating that the US Dollar will go “up and up”, and that statements made by Secretary of the Treasury Steven Mnuchin were ‘misinterpreted’ by markets. Further, Japan's inflation data which came out worse than expected also added to the Yen's weakness. On the last trading day of the week, the USD/JPY came under a renewed selling pressure after Kuroda's speech and broke below the 109 mark to its weekly high at 108.27. Speaking at a panel at the World Economic Forum in Davos, the Bank of Japan's Governor Kuroda said that medium to long-term inflation expectations was projected to rise, adding that some indicators pointed to rising wages as well. According to Kuroda, Japan is finally moving closer to the inflation target. These comments allowed the JPY to continue to gather strength against its rivals. JPY ended the week at 108.70 levels Technical Outlook:
Week ahead: The pair has given a extremely bearish close on the daily and weekly charts signalling further downmove towards 107.30 levels. Interim support lies at 108.00 levels. Only a convincing break and close below 107.30 shall open the gateway for a swift move towards 106.50 and 105.00 levels. On the upside, key resistance lies at 109.30 and 110.80 levels. Technical indicators are signalling the same bearish momentum. Key Support: 108.00, 107.30, 106.50 Key Resistance: 109.30, 110.80, 111.40 Advise: Importers are advised to cover their near term payables on spikes towards 109.30 and 110.50 levels. Exporters are advised to sell their very near term receivables on dips towards 107.30 levels and target better levels for further tenors.
For the week 29th Jan – 02nd Feb 2018
Gold
International Market Likely to move higher after a dip
Week Gone by: Gold opened the week at 1334.47 levels and initially dipped lower to 1328.31 levels. Given a bullish close on the short-term charts, the pair started to move higher and touched a high of 1366.07 levels. Profit booking at higher levels prompted the yellow metal to retrace back and end the week at 1349.76 levels. Week Ahead: The yellow metal has given a bullish close on the weekly chart while has given a bearish close on the daily chart signaling a downmove initially towards 1326.00 levels. Taking support at these levels, the pair could resume its upmove targeting 1365.00 levels. A convincing break and close above the same shall push it to 1375.00 levels. Further support lies at 1300.00 levels. Technical indicators are signaling the same bullish momentum. Key Support: 1326.00, 1300.00, 1284.00 Key Resistance: 1365.00, 1375.00, 1390.00 Advise: Short term traders are advised to buy the yellow metal on dips towards 1335.00 levels targeting 1375.00 levels while keeping a strict stop loss below 1325.00 levels.
For the week 29th Jan – 02nd Feb 2018
Forex Calendar Date
Forex Calendar
Time
Country
Data
Forecast
Previous
29/01/2018
19:00
US
Core PCE Price Index m/m
0.2%
0.1%
29/01/2018
19:00
US
Personal Spending m/m
0.5%
0.6%
29/01/2018
19:00
US
Personal Income m/m
0.3%
0.3%
30/01/2018
05:00
JP
Household Spending y/y
1.6%
1.7%
30/01/2018
05:00
JP
Unemployment Rate
2.7%
2.7%
30/01/2018
05:20
JP
Retail Sales y/y
2.1%
2.2%
30/01/2018
10:30
JP
BOJ Core CPI y/y
0.5%
0.6%
30/01/2018
-
DE
Prelim CPI m/m
-0.5%
0.6%
30/01/2018
15:30
EU
Prelim Flash GDP q/q
0.6%
0.6%
30/01/2018
20:30
US
CB Consumer Confidence
123.2
122.1
31/01/2018
05:20
JP
BOJ Summary of Opinions
-
-
31/01/2018
05:20
JP
Prelim Industrial Production m/m
1.5%
0.5%
31/01/2018
05:31
UK
GfK Consumer Confidence
-13
-13
31/01/2018
10:30
JP
Consumer Confidence
44.9
44.7
31/01/2018
10:30
JP
Housing Starts y/y
1.2%
-0.4%
31/01/2018
12:30
DE
Retail Sales m/m
-0.4%
2.3%
31/01/2018
14:25
DE
Unemployment Change
-20K
-29K
31/01/2018
15:30
EU
Unemployment Rate
8.7%
8.7%
31/01/2018
18:45
US
ADP Non-Farm Employment Change
191K
250K
For the week 29th Jan – 02nd Feb 2018
Forex Calendar
31/01/2018
20:30
US
Pending Home Sales m/m
0.5%
0.2%
01/02/2018
00:30
US
FOMC Statement
-
-
01/02/2018
00:30
US
Federal Funds Rate
