Rupee snapped a three-day losing streak as dollar inflows related to foreign funds and companies helped offset heavy month-end demand for the greenback from oil and other importers.
Sources also cited occasional dollar buying by the Reserve Bank of India, although the intervention was not believed to be as aggressive as in recent weeks. Traders will continue to focus on the measures new Prime Minister Narendra Modi led government will take to bring down the fiscal deficit and fight inflation.
Foreign investors have bought a net $1.46 billion in debt over the past four sessions, bringing their total buying so far this month to $3 billion. In shares, despite some modest selling over the past few sessions, net inflows in May are $2.4 billion. The partially convertible rupee closed at 58.93/94 per dollar compared to 59.04/05 on Tuesday.
In the offshore non-deliverable forwards, the one-month contract was at 59.21 while the threemonth was at 59.76. There was good dollar selling seen today, likely some corporate flows as well. Foreign banks were mostly on the sell side while there were importers and state-run firms seen bidding.
Technically market is under short covering as market has witnessed drop in open interest by -16.91% to settled at 156089 while prices up 0.0825 rupee, now USDINR is
getting support at 59.0025 and below same could see a test of 58.86 level, And resistance is now likely to be seen at 59.2425, a move above could see prices testing 59.34.
MCX-SX EURINR Jun 2014
Euro softened as expectations for easing by the European Central Bank at its upcoming meeting next week pressure the single currency lower. The euro steadily lost ground as investors in the United States and Britain returned from long holiday weekends and encountered stronger-than-expected U.S. durable goods data that was tempered by revisions to past reports.
ECB President Mario Draghi, said the bank was aware of risks from prices remaining too low for too long but that the bank had the tools to get inflation back to its 2 percent target. Germany’s import prices continued to decline in April, but at a slower pace than in the previous month, figures from Destatis showed. The import price index fell 2.4 percent year-on-year in April, following a sharp 3.3 percent drop in the previous month, which was the biggest fall since August last year.
Germany unemployment rate remained unchanged in April and employment increased from March due to the usual spring upturn, data from Destatis showed.The adjusted jobless rate came in at 5.2 percent, the same rate as seen in March. On an unadjusted basis, the unemployment rate dropped to 5.3 percent from 5.5 percent. About 2.26 million people were unemployed in April.
Technically market is under short covering as market has witnessed drop in open interest by -5.69% to settled at 11175 while prices up 0.015 rupee, now EURINR is getting support at 80.4425 and below same could see a test of 80.3275 level, And resistance is now likely to be seen at 80.715, a move above could see prices testing 80.8725.
MCX-SX GBPINR Jun 2014
GBP seen under pressure a day after soft U.K. mortgage lending data tempered expectations for a rate hike by the Bank of England later this year. Data from the British Bankers’ Association painted a mixed picture of the housing market but showed Britain’s banks last month approved the lowest number of mortgages since August.
One week before the Bank of England releases its own mortgage data for April, the figures cooled some of the fervour surrounding the housing market and tempered some of the more bullish expectations that the BoE could start raising interest rates later this year. Gbp has been rising steadily since last year, underpinned by expectations that a rapid economic recovery will see the BoE be the first major central bank to raise interest rates, most likely early in 2015 but maybe even sooner.
BoE deputy governor Charlie Bean’s comments that the bank’s plan to raise rates gradually means the first hike could come earlier than may otherwise have been the case had underpinned the currency in early trade before the mortgage data. Bank of England Governor Mark Carney said authorities have developed a range of tools to ensure that even if ‘too-big-to fail’ banks do fail, they can be resolved without severe disruption to the financial system.
Technically market is under long liquidation as market has witnessed drop in open interest by -35.17% to settled at 5788 while prices down -0.03 rupee, now GBPINR is getting support at 99.1 and below same could see a test of 98.99 level, And resistance is now likely to be seen at 99.41, a move above could see prices testing 99.61.
MCX-SX JPYINR Jun 2014
JPY settled flat after comments from the Bank of Japan governor that suggested current monetary policy was appropriate. Bank of Japan Governor Haruhiko Kuroda said the central banks learned from the global financial crisis that it is possible to implement monetary easing even in a situation where the policy rate is around zero percent.
After exhausting conventional policy measures of lowering rates virtually to the zero lower bound, central banks in advanced nations introduced unconventional tools such as asset purchases and forward guidance, Kuroda noted. Another lesson from the crisis is that stability of the economy as a whole cannot be achieved just by stabilizing prices and the real economy, he said. The third lesson is that “expectation management through communication with the market is critical to guiding the economy toward recovery,” Kuroda said.
Confidence among Japan’s small and medium- size enterprises improved modestly in May, after declining sharply in the previous month, survey data released by the Shoko Chukin Bank showed. The small business confidence index rose to 46.6 in May from 45.4 in April. In March, the reading was 53.5. Meanwhile, confidence in the manufacturing sector declined for the second straight month in May and the relevant index dropped to 45.1 from 45.7 in April. In March, the reading was 53.6.
Technically market is under short covering as market has witnessed drop in open interest by -37% to settled at 2173 while prices up 0.08 rupee, now JPYINR is getting support at 57.915 and below same could see a test of 57.79 level, And resistance is now likely to be seen at 58.125, a move above could see prices testing 58 21