Highlights

  •  US Unemployment Claims fell to 340,000 for w/e on 25th Oct’13.
  •  German Retail Sales declined by 0.4 percent in September.
  •  UK’s Nationwide HPI gained 1 percent in the month of October.

Asian markets are trading lower today on the back of expectation of QE tapering by the Federal Reserve in its December monetary policy meeting. However, sharp downside in market sentiments was restricted as a result of favorable manufacturing data from China.

China’s Manufacturing Purchasing Managers’ Index (PMI) gained by 0.3 points to 51.4-mark in October as against a rise of 51.1-level in September. HSBC Final Manufacturing PMI remained unchanged at 50.9-mark in the month of October.

US Dollar Index

The US Dollar Index (DX) increased around 0.5 percent yesterday on the back of rise in risk aversion in market sentiments in later part of the trade. Further, expectations that Federal Reserve will began QE tapering as early as in its December monetary policy meeting supported upside in the currency. Additionally, decline in jobless claims also acted as a positive factor. The DX touched an intra-day high of and closed at 80.26 on Thursday.

US Unemployment Claims declined by 10,000 to 340,000 for the week ending on 25th October 2013 as against a rise of 350,000 in prior week.Chicago Purchasing Managers’ Index (PMI) increased by 10.2 points to 65.9-mark in October from earlier rise of 55.7-level in September.

Dollar/INR

The Indian Rupee depreciated around 0.6 percent in yesterday’s trading session. The currency depreciated on account of month end dollar demand from importers. Further, strength in the DX in early part of the trade exerted downside pressure on the currency.

Additionally, rising foreign inflow of funds along with upbeat domestic market sentiments cushioned sharp downside movement in the currency. The Indian Rupee touched an intra-day low of 61.62 and closed at 61.61 on Thursday.

For the month of October 2013, FII inflows totaled at Rs.15706.20 crores ($2553.40 million) as on 31stOctober 2013. Year to date basis, net capital inflows stood at Rs.88933.60 crores ($16198.90 million) till 31stOctober 2013.

Outlook

From the intra-day perspective, we expect Rupee to trade on a negative note on the back of dollar demand from importers. Further, expectation of decline in manufacturing data from the country, weak market sentiments along with strength in the DX will exert downside pressure on the currency. However, sharp downside in the currency will be restricted as a result of rising inflow of foreign funds.

Technical Outlook valid for November 1, 2013

Contract

Trend

 Support

Resistance

US Dollar/INR Nov’13 (NSE/MCX-SX)

Up

61.70/61.50

62.20/62.60

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