Currencies World 05-06-2014 …

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MCX-SX USDINR Jun 2014

Rupee hit a near three-week low and weakened for a fourth consecutive session as the central bank was spotted buying dollars to curb gains in the currency while importers’ buying also added to the losses. India’s central bank decided to leave its key interest rates unchanged on Tuesday as inflation is expected to slow with the currency gaining strength. However, it announced a reduction in the proportion of deposits that banks should invest in bonds so as to increase liquidity.

The repo rate, the rate at which the Reserve Bank of India lends to banks, was maintained at 8.00 percent for the second straight policy meeting. The rate has been raised by 75 basis points since Raghuram Rajan took the helm of the central bank in September. The rupee had briefly strengthened early in the day when the Reserve Bank of India kept interest rates steady and signalled it may be done with rate hikes.

The ensuing optimism about growth helped offset some of the expected benefits from higher interest rates on the rupee. The rupee fell even though local shares rose to a record close as metal firms surged after surveys showed China’s factory and services sectors had their best performance in months.

Technically market is under fresh buying as market has witnessed gain in open interest by 11.18% to settled at 389851 while prices up 0.3425 rupee, now USDINR is getting support at 59.5025 and below same could see a test of 59.2175 level, And resistance is now likely to be seen at 59.885, a move above could see prices testing 59.9825.

MCX-SX EURINR Jun 2014

Euro ended with gains as support seen due to weakness in rupee despite market sentiments were jittery ahead of the European Central Bank’s policy meeting later in the week. Eurozone inflation slowed more than expected in May, raising concerns about deflationary pressures. Inflation fell to 0.5 percent in May from 0.7 percent in April, flash estimates published by Eurostat showed. The rate was forecast to ease marginally to 0.6 percent. Inflation held below the European Central Bank’s target of ‘below, but close to 2 percent’ for the sixteenth consecutive month.

Euro area unemployment rate unexpected dropped in April, but remained at a high level, figures from Eurostat showed. Sentiment on the single currency was vulnerable after 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 euro zone.

Last week, ECB President Mario Draghi said the bank was aware of the risks of persistently low inflation and was prepared to take steps to get euro zone inflation back to its target, the latest indication that the bank is on course to ease monetary policy next week.

Technically market is under fresh buying as market has witnessed gain in open interest by 4.95% to settled at 22917 while prices up 0.4675 rupee, now EURINR is getting support at 80.88 and below same could see a test of 80.485 level, And resistance is now likely to be seen at 81.495, a move above could see prices testing 81.715.

MCX-SX GBPINR Jun 2014

GBP gains due to weakness in rupee despite of release of disappointing U.K. construction data, although sentiment on the greenback still remained vulnerable. Markit research group said the U.K. construction purchasing managers’ index ticked down to a seven-month low of 60.0 in May, from a reading of 60.8 the previous month.

The report came a day after Markit said the U.K. manufacturing PMI fell to 57.0 this month, from a reading of 57.3 in May, in line with expectations. Meanwhile, the dollar remained under pressure after the Institute of Supply Management reported on Monday that its manufacturing purchasing managers’ index ticked down to 53.2 in May, from a eading of 54.9 the previous month, confouding expectations for a rise to 55.5. U.K. house prices rose more-than-expected in May though at a slower rate than in April, survey figures from the Nationwide Building Society showed.

House prices climbed 0.7 percent month-on-month in May, rising for the thirteenth consecutive month, following a 1.2 percent increase in April. The average price of a house in the U.K. was GBP 186,512 during May versus GBP 183,577 in the previous month. On a year-over-year basis, house prices rose at a faster rate of 11.1 percent in May compared with a 10.9 percent increase in April.

Technically market is under fresh buying as market has witnessed gain in open interest by 16.34% to settled at 23573, now GBPINR is getting support at 99.61 and below same could see a test of 99.145 level, And resistance is now likely to be seen at 100.265, a move above could see prices testing 100.455.

MCX-SX JPYINR Jun 2014

Yen ended with gains as weakness in rupee supported prices amid waning expectations of further ease in monetary policy by Bank of Japan. The National Consumer Price index Inflation in Japan rose to 3.4% in Japan in April from 2.1% a month earlier and 1.6% year-on-year.

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. 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.

Total labor cash earnings in Japan increased at a faster rate in April, a report from the Ministry of Health, Labor and Welfare showed. Total earnings rose 0.9 percent year-over-year in April following a 0.7 percent increase in March.

Technically market is under fresh buying as market has witnessed gain in open interest by 23.68% to settled at 3959 while prices up 0.145 rupee, now JPYINR is getting support at 58.0725 and below same could see a test of 57.8225 level, And resistance is now likely to be seen at 58.45, a move above could see prices testing 58.5775.

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