Currencies World 29-05-2014 …

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MCX-SX USDINR May 2014

Rupee posted its biggest single-day fall in more than two months dropping for a third straight session, weighed down by continued profit-taking in domestic shares and month-end dollar demand from importers. The new government will need to decide on steps taken by the previous government to curb imports, which helped narrow the current account deficit to $1.2 billion in the March quarter.

India has been able to narrow its current account deficit thanks to hefty foreign inflows, including net purchases of $5 billion worth of stocks and debt in the month so far, taking total inflows this year to more than $14 billion. Investors will also focus on gross domestic product data for the March quarter, due to be announced on Friday, while the Reserve Bank of India is set to review policy on June 3.

After Narendra Modi was sworn in as India’s prime minister late on Monday, investors are now focusing on his policies, which will help determine whether a recent rally in the rupee and in shares is justified. New finance minister Arun Jaitley will be especially important as investors a wait a new budget, expected by early July, that will need to reassure markets that India can contain its fiscal deficit.

Technically market is under short covering as market has witnessed drop in open interest by -15.53% to settled at 187865 while prices up 0.245 rupee, now USDINR is getting support at 58.91 and below same could see a test of 58.68 level, And resistance is now likely to be seen at 59.23, a move above could see prices testing 59.32.

MCX-SX EURINR May 2014

Euro seen steady as markets eyed a second day of remarks by European Central Bank President Mario Draghi, while his comments on Monday continued to weigh on the single currency. On Monday, ECB President Draghi said the bank saw a risk of a deflationary cycle taking hold in the euro zone.

Draghi said the ECB is ready to act should it see signs of a negative inflation spiral taking hold, and indicated that the bank is weighing a wide range of policy options, including interest rate cuts, and liquidity injections or broad-based asset purchases to help shore up the fragile recovery in the euro area. “What we need to be particularly watchful for at the moment is the potential for a negative spiral to take hold between low inflation, falling inflation expectations and credit, in particular in stressed countries,” Draghi said.

“There is a risk that disinflationary expectations take hold,” prompting consumers and businesses to delay spending. “We are not resigned to allowing inflation to remain too low for too long,” he added. French households’ confidence remained at its April level as widely expected, survey results showed. The confidence index came in at 85 in May, the same score as seen in April and matched economists’ expectations, the statistical office Insee said.

Techniclly market is under short covering as market has witnessed drop in open interest by -10.88% to settled at 11849 while prices up 0.3675 rupee, now EURINR is getting support at 80.305 and below same could see a test of 80.025 level, And resistance is now likely to be seen at 80.78, a move above could see prices testing 80.975.

MCX-SX GBPINR May 2014

GBP ended with gains but pared some of its gains after the release of downbeat U.K. mortgage approvals data. Industry data showed that U.K. mortgage approvals rose by 42,200 last month, compared to expectations for a 45,200 increase. Mortgage approvals in March were revised down to a 45,000 rise from a previously estimated 45,900 increase. Demand for sterling continued to be underpinned after Bank of England Deputy Governor Charles Bean said that U.K. interest rates could start rising before next spring.

The pound also remained supported after last week’s minutes of the BoE’s May meeting indicated that some policymakers believe the decision on when to raise rates is “becoming more balanced,” indicating that they are becoming more hawkish about the argument for hiking interest rates. U.K. house prices continued to rise in May, as households expect the price of their property to rise at the strongest pace since early 2009, a combined survey by property consultancy Knight Frank and Markit Economics showed.

The U.K. economy grew at a faster pace as initially estimated in the first quarter, driven by consumer spending and business investment, suggesting that a more balanced recovery is on track, second estimates from the ONS showed.

Technically market is under short covering as market has witnessed drop in open interest by -13.48% to settled at 8928 while prices up 0.305 rupee, now GBPINR is getting support at 98.79 and below same could see a test of 98.4425 level, And resistance is now likely to be seen at 99.5475, a move above could see prices testing 99.9575.

MCX-SX JPYINR May 2014

JPY seen supported after data on the corporate services price index beat expectations. Corporate service prices in Japan were up 3.4 percent on year in April, the Bank of Japan said -following the 0.7 percent increase in March. Among the individual components of the survey, prices were higher for communication, leasing, transportation, engineering and motor vehicle repair. On a monthly basis, corporate service prices jumped 2.4 percent after adding 0.7 percent in the previous month.

The minutes of BOJ board meeting showed that most of the members said risks on the price front could be assessed as being largely balanced, but one member viewed risks to prices as tilted to the downside. Takeh iro Sato proposed to change the current expression about the inflation, suggesting around 2 percent inflation will come into sight around the middle of the projected period.

Further, Sato said outlook for economic activity and prices should be adjusted to suggest that the Japan’s economy “is judged as likely to head toward achieving around 2 percent inflation”. “The inflation rate of 2 percent is likely to be reached toward the end of the projection period as the Bank continues with quantitative and qualitative monetary easing, aiming to achieve the price stability target of 2 percent.”

Technically market is under fresh buying as market has witnessed gain in open interest by 34.15% to settled at 3449 while prices up 0.19 rupee, now JPYINR is getting support at 57.805 and below same could see a test of 57.58 level, And resistance is now likely to be seen at 58.125, a move above could see prices testing 58.22.

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