Currencies World 11-06-2014 …

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MCX-SX USDINR Jun 2014

Rupee weakened as continued dollar buying intervention by the Reserve Bank of India and demand for the greenback from importers offset positive sentiment due to record high domestic shares. Inflation will remain a top priority for the government, President Pranab Mukherjee told parliament while finance minister Arun Jaitley said economic growth cannot be compromised at any cost while containing inflation and concentrating on fiscal consolidation. Foreign fund flows into domestic shares and debt will remain key for the rupee in thenear-term, although traders expect the central bank to continue to step in to buy dollars and prevent any excessive appreciation.

The consumer price inflation data due on Thursday will also be watched, though a large impact on the foreign exchange market is unlikely. India will likely raise the foreign investment limit in government debt soon, as almost all the allocation has already been taken up as overseas buyers pile into the country’s financial markets, said four officials with direct knowledge of the government’s thinking.

Foreign exchange reserves fell to $312.38 billion as of May 30 compared with $312.66 billion, the Reserve Bank of India (RBI) said. The Reserve Bank of India was spotted buying dollars via state-run banks starting around 58.99-59.00, continuing its heavy intervention to curb strength in the rupee.

Technically market is under fresh buying as market has witnessed gain in open interest by 0.62% to settled at 423189 while prices up 0.0275 rupee, now USDINR is getting support at 59.0875 and below same could see a test of 58.9275 level, And resistance is now likely to be seen at 59.36, a move above could see prices testing 59.4725.

MCX-SX EURINR Jun 2014

Euro edged lower but losses were held in check amid expectations that the European Central Bank will hold off on further monetary easing for now. Eurozone investor confidence weakened for the second straight month in June, to the lowest since December 2013, survey results from the think tank Sentix showed. The investor sentiment index fell unexpectedly to 8.5 in June, the lowest since December 2013, from 12.8 in May.

The score was forecast to rise to 13 in June. The current situation index plunged to 0.3 in June from 7.5 in May. At the same time, the 6-month expectations index declined to 17, the lowest since August 2013, from 18.3 in the prior month. The ECB unveiled a package of measures to avert the threat of persistently low inflation in the euro area, briefly sending the single currency to lows, before later erasing the day’s losses.

The bank cut the main refinancing rate in the euro area to a record low 0.15% and imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses. The euro-zone indicators’ decrease all the more comes as a surprise as ECB has just announced a whole package of new measures to push economic growth and inflation, it said.

Technically market is under fresh selling as market has witnessed gain in open interest by 14.51% to settled at 27567, now EURINR is getting support at 80.535 and below same could see a test of 80.3825 level, And resistance is now likely to be seen at 80.8525, a move above could see prices testing 81.0175.

MCX-SX JPYINR Jun 2014

Yen settled flat on wider appetite after strong US economic data amid hopes of improved growth in Japan after better than expected. Second estimates released by Japan’s Cabinet Office showed that the nation’s GDP rose at a faster than initially estimated pace in the first quarter, with a strong increase in private non-residential investment supporting the upside. The first quarter performance reflected strong economic activity in the form of consumer spending and investment by corporations ahead of the sales tax hike in April.

The tougher quarterly comparisons could render the second quarter performance weak. GDP rose 1.6 percent quarter-over-quarter, bigger than the 1.5 percent growth estimated initially and the consensus estimate of 1.4 percent growth. This followed a 0.1 percent rise in the fourth quarter and marked the fastest increase since the 2.6 percent increase in the third quarter of 2011. Confidence among Japan households improved more-than-expected in May, monthly survey data from Cabinet Office showed.

The consumer confidence index rose to a seasonally adjusted 39.3 in May from 37.0 in April, well above the economists’ forecast of 37.6. The survey was conducted on May 15. Japan’s economy watchers’ assessment of current conditions and their expectations strengthened in May, survey data showed.

Technically market is under fresh buying as market has witnessed gain in open interest by 38.31% to settled at 5415 while prices up 0.0325 rupee, now JPYINR is getting support at 57.6 and below same could see a test of 57.3075 level, And resistance is now likely to be seen at 58.1925, a move above could see prices testing 58.4925.

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