currHighlights

  •  India’s Services PMI rose by 2.5 points to 47.1-mark in prior month.
  •  US ISM Non-Manufacturing PMI increased to 55.4-mark in October.
  •  European Union cut its GDP forecast to 1.1 percent for 2014.
  •  UK’s Services PMI gained to 62.5-mark in the last month.

Asian markets are trading on a lower note today on the back of mixed reaction towards the QE tapering to be seen by the Federal Reserve in its December monetary policy meeting after favorable economic data from US in yesterday’s trade. While on the other hand, likelihood of decline in US GDP data and rise in unemployment rate data to be released during the week will ease the concerns regarding the QE tapering.

US Dollar Index

The Dollar Index witnessed gains on Wednesday as positive US economic data boosted hopes that a QE taper was around the corner. Additionally, the DX also strengthened against a basket of major currencies as expectations are doing rounds that the European Central Bank may announce an easy monetary policy or could even lower interest rates. The DX appreciated around 0.2 percent and closed at 80.79 on Tuesday.

US Institute for Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) increased by 1 point to 55.4-mark in October as against a rise of 54.4-level in September. Investor’s Business Daily (IBD) / TechnoMetrica Institute of Policy and Politics (TIPP) Economic Optimism gained by 3 points to 41.4-level in November from 38.4-mark in October.

Dollar/INR

Dollar selling coupled with rising FII inflows is helping the Rupee sustain despite mixed Indian economic trends. The currency bounced back from its lows of 61.95 yesterday and closed at 61.63 on the back of these two

factors along with news of inflows from a foreign telecom company. The Indian Rupee appreciated around 0.2 percent on Tuesday. India’s Services PMI rose by 2.5 points to 47.1-mark in October as against a rise of 44.6-level in September.

For the month of November 2013, FII inflows totaled at Rs.2009.30 crores ($326.91 million) as on 5th November 2013. Year to date basis, net capital inflows stood at Rs.90943 crores ($16525.80 million) till 5th November 2013.

Outlook

While US economic data yesterday was positive, data on Thursday is likely to show that GDP for the third-quarter may rise 2 percent as against 2.5 percent during the second-quarter. A mixed movement is expected in the DX as while weak US economic data is a concern on one hand, a negative trend in the Euro is positive on the other.

A mixed trend is seen in the global markets today and over the trade it is likely that a sense of caution will develop on account of expectations of weaker US GDP growth that is to be released tomorrow. This coupled with DX strength is likely to add pressure on the Rupee today.

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Currency market Technical Report 06 November 2013

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