Highlights

  •  S&P warns cut in India’s credit rating to BBB- in yesterday’s trade.
  •  ECB cuts the Minimum Bid Rate to 0.25 percent in November.
  •  US Advance GDP rose 2.8 percent in the quarter ended September.

Asian markets are trading on a lower note today on the back of favorable GDP data from US which increased concerns regarding QE tapering by the Federal Reserve.

US Dollar Index

The US Dollar Index (DX) gained around 0.4 percent yesterday on the back of positive economic data from the country. This has led to speculation that the Federal Reserve may start QE taper sooner than expected, thereby supporting upside in the DX.

Additionally, cut in key refinancing rate by 25 bps to 0.25 percent by the European Central Bank acted as a positive factor. The DX touched an intra-day high of 81.565 and closed at 80.85 on Thursday.

US Advance GDP gained 2.8 percent in the September quarter as against a gain of 2.5 percent in the prior quarter. Unemployment Claims declined to 336,000 in the week ended November 1 from 340,000 in the prior week. Advance GDP Price Index rose 1.9 percent in the quarter ended September as compared to a gain of 0.6 percent in the previous quarter.

Dollar/INR

The Indian Rupee traded on a flat note in yesterday’s trading session. The currency opened at 62.38 levels but depreciated in early part of the trade on the back of dollar demand from importers. Further, S&P credit rating agency threatened to cut the India’s credit rating to BBB- from A-3 with a negative outlook. This factor led to weak domestic market sentiments and Indian Rupee touched a five week low of 62.77 levels in yesterday’s trade.

However, in the later part of the trade selling of dollars by state run banks and weaker DX in early part of the trade recovered the losses from morning trade and closed at 62.415 on Thursday.

For the month of November 2013, FII inflows totaled at Rs.2474.90 crores ($402.16 million) as on 7thNovember 2013. Year to date basis, net capital inflows stood at Rs.91408.60 crores ($16601.10 million) till 7thNovember 2013.

Outlook

 

From the intra-day perspective, we expect Indian Rupee to depreciate on the back of threat for cut in credit rating on India by S&P. Further, dollar demand from importers, weak market sentiments along with strength in the DX will exert downside pressure on the currency. However, sharp downside in the currency will be cushioned as a result of selling of dollars by the state run banks.

Technical Outlook valid for November 8, 2013

 

Trend

 Support

Resistance

US Dollar/INR Nov’13 (NSE/MCX-SX)

Up

62.70/62.60

63.20/63.40

 

Euro/INR

The Euro depreciated around 0.7 percent yesterday as the European Central Bank unexpectedly cut its key refinancing rate by 25 bps to a record low 0.25 percent to boost growth.

Also, unfavorable economic data from the region coupled with weak global market sentiments acted as negative factors. The Euro touched an intra-day low of 1.3295 and closed at 1.3418 on Thursday.

German Industrial Production declined by 0.9 percent in September as against a gain of 1.4 percent in August. European Central Bank (ECB) cut the Minimum Bid Rate by 25 bps to 0.25 percent in November from rise of 0.5 percent in October.

Outlook

In today’s session, we expect Euro to trade lower on account of cut in the key rates by the ECB in yesterday’s trade and possibility of further cut in rates possible if situation demands. Further, weak market sentiments along with strength in the DX will add downside pressure on the currency. However, sharp downside in the currency will be cushioned as a result of expectations of favorable economic data from the region.

Technical Outlook valid for November 8, 2013

 

Trend

 Support

Resistance

Euro/INR Nov’13(NSE/MCX-SX)

Up

84.70/84.50

85.20/85.50

 

GBP/INR

 

The Sterling Pound gained around 0.1 percent yesterday as the Bank of England maintained its monetary policy stance.

However, strength in the DX coupled with weak global market sentiments capped gains in the Sterling Pound. The currency touched an intra-day high of 1.6113 and closed at 1.6096 on Thursday.

UK’s Asset Purchase Facility remained unchanged at 375 billion in November. Official Bank Rate also kept unchanged at 0.5 percent in the current month.

Outlook

From the intra-day perspective, we expect Pound to trade on a lower note on account of weak market sentiments coupled with strength in the DX. However, sharp downside in the currency will be prevented on the back of forecast for favorable trade balance from the country.

Technical Outlook valid for November 8, 2013

 

Trend

 Support

Resistance

GBP/INR Nov’13 (NSE/MCX-SX)

Up

100.80/100.60

101.30/101.50

 

JPY/INR

The Japanese Yen gained around 0.6 percent yesterday taking cues from weak global market sentiments that led to rise in demand for the low yielding currency.

The Yen touched an intra-day high of 97.63 and closed at 98.08 on Thursday.

Outlook

Appreciation in the Yen is expected in today’s trade as a result of rise in risk aversion in market sentiments which will lead to rise in demand for the low yielding currency.

Technical Outlook valid for November 8, 2013

 

Trend

 Support

Resistance

JPY/INR Nov’13 (NSE/MCX-SX)

Up

63.50/63.40

63.90/64.10

 

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Currency Technical Report 08 November 2013

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