Currencies World 04-06-2014 …

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MCX-SX USDINR Jun 2014

Rupee weakened for a third consecutive session as caution ahead of the central bank’s policy review and dollar demand from oil importers offset the biggest daily gains in domestic shares in three weeks. Data showed the HSBC Manufacturing Purchasing Managers’ Index (PMI) expanded at a slightly faster pace in May, or data showing Indian economy grew 4.7 percent in 2013/14, below the official estimate of 4.9 percent.

Investors were focused on the Reserve Bank of India’s monetary policy review on Tuesday which will give an insight into its inflation and rates outlook. Currency market participants will also look for any comments on whether restrictions on gold imports will be eased, and on any potential measures to lift curbs on proprietary trading in currency futures and options that were imposed in July when the rupee was plumbing record lows.

Large state-owned banks stepped in to buy dollars for oil companies, which offset the impact from the biggest gain in domestic indexes since May 12. The gains came in part after foreign investors purchased shares worth a net 29.77 billion rupees ($503.8 million) on Friday, after overseas funds had sold in five of the six sessions until Thursday.

Technically market is under short covering as market has witnessed drop in open interest by -0.09% to settled at 350659 while prices up 0.0125 rupee, now USDINR is getting support at 59.28 and below same could see a test of 59.17 level, And resistance is now likely to be seen at 59.51, a move above could see prices testing 59.63.

MCX-SX EURINR Jun 2014

Euro seen flat as Friday’s disappointing U.S. data continued to weigh on demand for the greenback, while caution ahead of the European Central Bank’s policy meeting this week held the euro in check. The recovery in the Eurozone manufacturing sector was slower than initially estimated in May, final data from Markit Economics showed. The final seasonally adjusted Markit manufacturing Purchasing Managers’ Index fell to 52.2 from 53.4 in April. The flash estimate for May was 52.5.

The Spanish manufacturing sector continued to recover in May as output and new orders expanded further at solid rates, data from Markit Economics showed. The seasonally adjusted Purchasing Managers’ Index rose to 52.9 in May from 52.7 in April. The score above 50 indicates expansion. Manufacturing production increased for the sixth month in a row in May. New business also expanded for the sixth consecutive month.

Data showed that the rate of growth in purchasing activity quickened to the sharpest in more than four years in line with greater production requirements. In the euro zone, data showing that the annual rate of inflation in Italy and Spain slowed in May added to expectations that the ECB will take steps to tackle low consumer price growth, which is threatening the fragile recovery in the single currency bloc.

Technically market is under fresh buying as market has witnessed gain in open interest by 0.25% to settled at 21836 while prices up 0.01 rupee, now EURINR is getting support at 80.6825 and below same could see a test of 80.465 level, And resistance is now likely to be seen at 81.1175, a move above could see prices testing 81.335.

MCX-SX GBPINR Jun 2014

GBP edged lower after the release of tepid economic reports from the U.K., although Friday’s disappointing U.S. data continued dampen demand for the greenback. British manufacturing activity continued robust expansion in May, led by strong growth in output, new orders and new export business, survey data from the Markit Economics and the Chartered Institute of Purchasing & Supply showed.

The Markit/CIPS Purchasing Managers’ Index eased to 57 from April’s five-month high of 57.3. A PMI score above 50 suggest expansion in the sector. The sector has grown every month since March last year. Improved order books and strong economic conditions helped manufacturing production to rise for the fifteenth month running. Production and new business rose across the board with improvement in the consumer, intermediate and investment goods sectors. U.K. mortgage approvals declined to the the lowest since July 2013, data from the Bank of England showed.

Approvals fell more-than-expected to 62,918 in April, a nine-month low, from 66,563 in March. The expected level was 64,500. Meanwhile, the dollar remained under pressure after data on Friday showed that U.S. consumer spending fell 0.1% in April from a month earlier, missing forecasts for a 0.2% increase.

Technically market is under short covering as market has witnessed drop in open interest by -8.28% to settled at 20262 while prices up 0.0575 rupee, now GBPINR is getting support at 99.14 and below same could see a test of 98.74 level, And resistance is now likely to be seen at 99.8, a move above could see prices testing 100.06.

MCX-SX JPYINR Jun 2014

JPY dropped as strong US data and Chinese manufacturing data eased concerns of slowdown in world’s third-largest economy. Japan’s manufacturing output declined for the second consecutive month in May, though at a slower rate, a report by Markit Economics showed. The manufacturing purchasing manager’s index came in at 49.9 in May, following the 49.4 figure in April.

According to the report, though the headline index is below the 50-mark that separates expansion and contraction, a broad stabilisation in business conditions in the manufacturing sector was seen in May. The decline in manufacturing output was attributed to a decline in demand due to an increase in sales tax, the report said. Despite the decline in manufacturing output, employment grew for the tenth consecutive month as companies hired extra staff anticipating workload growth.

Investors were going short on yen and long on dollar tracking strong dollar globally after good data from US. Strong data from China widened investor’s risk appetite on the hopes of recovery in China and they were seen selling yen. Bank of Japan in its last policy maintained interest rates at 0.1% and pledged to expand the monetary base by 60-70 trillion yen per year by purchasing government bonds and exchange traded funds.

Technically market is under long liquidation as market has witnessed drop in open interest by -10.86% to settled at 3201, now JPYINR is getting support at 58.06 and below same could see a test of 57.9875 level, And resistance is now likely to be seen at 58.2725, a move above could see prices testing 58.4125.

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