Rupee held in a tight range as lack of fresh domestic triggers prompted investors to stay on the sidelines while mixed Asian currencies and shares also failed to provide any clear direction. India’s exports increased at the fastest pace in six months in May, in a boost for Prime Minister Narendra Modi’s new government as it signalled a loosening of gold import rules and a push to improve trade ties with the United States.
India’s exports rose 12.4 percent in May over the previous year – the sharpest rise in 6 months – helped by a weaker rupee, government data showed. India’s trade deficit was USD11.2bn in May, broadly in line with our projection of USD11.5bn and marginally higher than the USD10.1bn gap in April. FY14-15 trade reports have been better than FY13-14 so far, and the trade balance has been on an improving trend.
Traders will now focus on retail inflation data, due to be released after market hours on Thursday, for direction. However, a large impact is unlikely on Friday unless the data is significantly off market expectations. Industrial output data due around the same time is expected to show output expanded 1.9 percent annually in April after falling 0.5 percent in March.
Technically market is under short covering as market has witnessed drop in open interest by -2.88% to settled at 413365 while prices up 0.0825 rupee, now USDINR is getting support at 59.465 and below same could see a test of 59.34 level, And resistance is now likely to be seen at 59.625, a move above could see prices testing 59.66.
MCX-SX EURINR Jun 2014
Euro dropped after the dollar’s yield advantage over the single currency widened in the wake of upbeat U.S. economic data and the European Central Bank’s monetary easing. The ECB steps announced last week have been seen as being partly aimed at taming upward pressure on the euro, the strength of which can import disinflation. Euro also seen under pressure as a widening yield gap between euro zone and U.S. government bonds pressured the single currency lower. Demand for the dollar continued to be underpinned by higher U.S. Treasury yields.
The yield on the U.S. 10-year Treasury note rose to 2.64%, its highest in a month. Borrowing costs in the euro zone have fallen in recent sessions due to the diverging monetary policy stance between the European Central Bank and the Federal Reserve. The ECB cut all its main rates to record lows and for the first time imposed negative deposit rates on commercial lenders, in a bid to tackle persistently low rates of inflation and shore up the recovery in the region.
French industrial production recovered as expected in April underpinned by factory output, data from the statistical office Insee revealed. Industrial production grew 0.3 percent month-on-month in April, in line with forecast, reversing the 0.4 percent drop in March.
Technically market is under short covering as market has witnessed drop in open interest by -1.51% to settled at 22990, now EURINR is getting support at 80.3525 and below same could see a test of 80.2225 level, And resistance is now likely to be seen at 80.63, a move above could see prices testing 80.7775
MCX-SX GBPINR Jun 2014
GBP seen supported after official data showed that the U.K. unemployment rate fell to a fresh five year low, bolstering the outlook for the broader economic recovery. The Office for National Statistics reported that the U.K. unemployment rate fell to 6.6% in the three months to April, the lowest since early 2009.
The consensus forecast had been for a decline to 6.7% from 6.8% in the previous three months. The claimant count, or number of people receiving jobless benefits fell by 27,400, ahead of forecasts for a for a decline of 25,000 people. April’s figure was revised to a drop of 28,400 from 25,100. However, the report also showed that weekly earnings rose by just 0.7% in the three months to April, still well below inflation, which hit 1.8% in April.
A faster-than-anticipated decline in the unemployment rate earlier this year prompted the Bank of England to update its forward guidance, under which it originally said interest rates would remain on hold until the jobless rate fell below 7%.Earlier in the week, BoE policymaker Ian McCafferty said the bank is moving closer to hiking rates and added that economic data over the coming months would be key in determining the exact timing of a rate increase.
Technically market is under fresh buying as market has witnessed gain in open interest by 0.02% to settled at 24443 while prices up 0.1325 rupee, now GBPINR is getting support at 99.535 and below same could see a test of 99.3975 level, And resistance is now likely to be seen at 99.8375, a move above could see prices testing 100.0025.
MCX-SX JPYINR Jun 2014
Yen strengthened after mixed data sets that mostly pointed to better economic momentum. An index measuring prices for domestic corporate goods was up 0.3 percent on month in May, the Bank of Japan said. The headline figure beat forecasts for an increase of 0.1 percent following the 2.8 percent gain in April. On a yearly basis, prices climbed 4.4 percent – also beating expectations for 4.1 percent, which would have been unchanged.
Business conditions in Japan were down in the second quarter, the latest business survey index from the Ministry of Finance revealed. The BSI for all industries was down 14.6 percent on quarter among large corporations after rising 12.7 percent in the first quarter. Sentiment for large manufacturers was down 13.9 percent after adding 12.5 percent in the previous three months. Business conditions in Japan declined in the second quarter, the latest business survey index from the Ministry of Finance revealed.
The BSI for all industries was down 14.6 percent on quarter among large corporations after rising 12.7 percent in the first quarter. Sentiment for large manufacturers was down 13.9 percent after adding 12.5 percent in the previous three months. The outlook for Q3 showed an increase of 13.4 percent for all industries, 16.0 percent for manufacturers and 12.1 percent for non-manufacturers.
Technically market is under fresh buying as market has witnessed gain in open interest by 3.16% to settled at 6226, now JPYINR is getting support at 58.1875 and below same could see a test of 57.99 level, And resistance is now likely to be seen at 58.4975, a move above could see prices testing 58.61.