Currency Research Desk - Karvy Commodities · January after a 0.5% decline in December, suggesting a possible turnaround after three years of decline. The German economy expanded

Currency Research Desk Mail Us at [email protected]

1

Currency Weekly

2013

, 2013

Currency Research Desk

Sunday, 01 March 2015

US Dollar Index closes over 95 Mark

INDICES LAST 1 week ago % Change

NIFTY 8901.85 8833.60 0.77

SENSEX 29361.50 29231.41 0.45

NASDAQ 4963.53 4955.97 0.15

DOW JONES INDUSTRIAL 18132.70 18140.44 -0.04

SHANGHAI COMPOSITE 3310.30 3246.91 1.95

NIKKIE 225 18797.94 18332.30 2.54

HANGSENG 24823.29 24784.88 0.15

FTSE Index 6946.66 6915.20 0.45

CROSS LAST 1 week ago % Change

EURUSD 1.1196 1.1381 -1.63

GBPUSD 1.5438 1.5399 0.25

USDJPY 119.63 119.03 0.50

USDCAD 1.2515 1.2531 -0.13

USDCHF 0.9543 0.9382 1.72

USDSEK 8.3373 8.3848 -0.57

DOLLAR INDEX 95.293 94.253 1.10

USDINR YTD -0.51% EURINR YTD -18.26% GBPINR YTD -7.15% JPYINR YTD -12.51%

Global economic data turned brighter this week, driving

stocks higher. Greece and its creditors agreed to a four-month extension on its financial lifeline, settling immediate concerns of a “Grexit” from the Eurozone. Major economic events for this week:

US GDP growth revised down to 2.2% for fourth

quarter

US service sector expands, home prices rise, and

confidence falls

Greece receives four-month bailout extension

Eurozone sentiment rises

Indian ministry of finance forecast economic growth of

8.1% to 8.5% in fiscal 2015

Initial claims for US unemployment benefits jumped 31,000 to 313,000 for the holiday-shortened week ended 21 February. The four-week moving average rose 11,500 to 294,500. Greece’s anti-austerity government and its creditors agreed to a four-month extension of the country’s bailout. While this merely delays an ultimate resolution, it averts the immediate risk of a debt default and the possible departure of Greece from the Eurozone.

Economic sentiment in the Eurozone rose to a seven-month high in February. Bank lending to the private sector fell 0.1% in January after a 0.5% decline in December, suggesting a possible turnaround after three years of decline. The German economy expanded 0.7% in the fourth quarter and 1.6% for the full year. Its jobless ranks fell by 20,000 to 2.81 million in February, after a 10,000 drop in January, and the unemployment rate of 6.5% is the lowest in more than two decades. The GfK consumer sentiment index among German shoppers reached a 13-year high in March.

Volatility in crude oil prices continued this week, with large daily ups and downs. During February, Brent prices rose by around 15%

India’s Ministry of Finance forecast economic growth of 8.1% to 8.5% in fiscal 2015, which would place the country ahead of China as the world’s fastest-growing large economy. India is on track to grow 7.4% for the current fiscal year ending 31 March.

Global Economic Review & Outlook


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Currency Insight

Dollar faced high volatility in the latter half of the week with the Index against 6 major currencies globally initially moved lower towards 94 mark however later scaled higher following mixed to positive expectations over US economy and FED comments. We saw weakness prevailing in the greenback as FED Chair Janet Yellen testified against the US Congress giving a mixed outlook for rate hike. Yellen’s comments on maintaining its pledge to be “patient” with regards to benchmark interest rate hike was taken moderately taken positively by equities though US Dollar index moved lower amidst fears that rate increase might not come soon. However, in latter half of past week, comments from other regional FED officials and decent US data aided support to he Greenback which on a week on week comparison advanced around 1.1% to 95.30 level, closing almost at its weekly highs. In the coming week, markets focus would be on important manufacturing and employment indicators. Data variables like ISM Manufacturing and Services PMI, Factory Orders, ADP Non-Farm Employment Change, Non-Farm Payrolls data along with Unemployment figures would be watched carefully. While overall health over Man sector in the US is still going strong, we have recently seen some corrections while the same might get reflected into the coming week’s reading. The most important indicator next week would be the Non-Farm payrolls data. Markets forecasts stand for a reading around 235,000-245,000 monthly Job addition, around the average for 2014 while moderately lower than 257,000 added in Jan. if we get a reading in the aforementioned range, other than intraday volatility which the data tends to drive, we believe it would largely be seen on positive footing supporting the bullish case for US Dollar and equities. On a composite approach, USDX may trade largely ranged in the initial half, witness huge zig-zag phase in latter half while broadly is expected to stay with a positive bias in the next week.

US Nonfarm Payrolls watched closely d

CURRENCY S2 S1 Last* R1 R2 RECOMMENDATION

Dollar Index 93.2505 93.6910 94.2530 94.6820 95.2325 BUY NEAR 94.95 TGT 96.6 SL 94.4

Note: The call mentioned above are indicative in nature. *Last price as per Friday close

Dollar Index Technical Chart and Recommendation

Dollar Index Review and Fundamental Outlook


3

Currency Insight

Indian rupee has traded on a positive note this week in anticipation of positive reforms that are to be introduced. Indian

rupee appreciated by more than 40 paisa this week in the run up to the Union Budget on Saturday.

In a nutshell, the announcements that have been made in this budget are likely to be rupee neutral with a minor chance of

appreciation in the short term. Key highlights of the Budget that would be impact the Indian rupee can be listed as below:

GDP growth seen at between 8 percent and 8.5 percent.

Nominal economic growth seen between 11 and 12 percent

Aiming double digit growth rate, and display of optimism for the same

Expects consumer inflation to remain close to 5 percent by March, and RBI to have an inflation target below 6

percent.

Government targets 410 billion rupees ($6.7 billion) from stake sales in companies in 2015/16

Total stake sale in 2015/16 seen at 695 billion rupees

Next week being a data intensive one for the International markets, we can expect some amount of increased volatility in the

Indian currency market as well. Large swings are expected in the in EURINR, JPYINR and GBPINR with the USDINR pair likely

to be trading in a small range with mixed to slightly positive bias for Rupee.

CURRENCY CONTRACT S2 S1 Last* R1 R2 RECOMMENDATION

USDINR-MCX-SX Mar-2015 61.74 62.07 62.22 62.75 63.09 SELL NEAR 62.34 TGT 61.85 62.56

USDINR-NSE Mar-2015 61.74 62.07 62.22 62.75 63.09 SELL NEAR 62.34 TGT 61.85 62.56

USDINR Spot 61.93 62.05 62.22 62.33 62.48 SELL NEAR 62.02 TGT 61.55 SL 62.26

Note: The calls mentioned above are indicative in nature. *Last price as per Friday close

Indian Rupee Technical Chart and Recommendation

Indian Rupee Review and Fundamental Outlook


4

Currency Insight

Euro recovered from Thursday’s sudden slide on friday only to close at 1.1197 adding 38 points as the US dollar appreciated

against a basket of currencies after the US GDP data was released. Hopes for a recovery in the Eurozone economy this year

were aided Thursday by figures showing bank lending to the private sector declined only slightly in January, while jobless

numbers continued to fall in Germany.

However, a survey released by the European Commission showed Eurozone businesses weren’t as encouraged as consumers

by the European Central Bank’s late January announcement of a more aggressive stimulus program. Falling oil prices have

helped boost consumer spending in parts of the currency area, but without a pickup in business investment, any recovery the

Eurozone may experience in 2015 will be modest.

With a huge line of important data that is to be released on every day of next week from the European union next week, we

can expect a highly volatile session for the shared currency. Manufacturing and services PMI, Retail sales, CPI from Germany

and Euro area would all be looked at closely next week. Expectations for most of the data that is to be released is to remain

unchanged but the recent exhibition of the German economic strength, we can hope for some support for the shared currency

this week.


EURUSD Spot 1.1207 1.1306 1.1381 1.1477 1.1549 SELL NEAR 1.1250 TGT 1.0920 SL 1.1320

EURINR-MCX-SX Mar-2015 68.84 69.73 69.92 71.40 72.18 SELL NEAR 70.15 TGT 69.25 SL 70.40

EURINR-NSE Mar-2015 68.84 69.73 69.92 71.40 72.18 SELL NEAR 70.15 TGT 69.25 SL 70.40


Euro Spot Technical Chart and Recommendation

Euro Spot Review and Fundamental Outlook


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Currency Insight

The British pound closed the week down from its weekly high at 1.5595 as strong GDP data and comments from the BoE helped support cable this week. The pair closed at 1.5438. This week has seen a raft of warnings from analyst teams at major banks on risks to the pound, with worries over heavier spending and taxes and regulation on the financial sector by any potential center-left Labour government top of the list. In sterling’s favor are far higher government bond yields than those in the better-balanced euro zone economies and the prospect of a rise in interest rates sometime in the next year or so that will bolster returns. Data released on Thursday showed firms’ investments fell at their sharpest rate in nearly six years in the last quarter of 2014, hit by lower investment in the petroleum sector as global oil prices fell. British gross domestic product between October and December grew by a quarterly 0.5 percent, slowing from 0.7 percent in the third quarter. That was the slowest quarterly growth rate in a year, but was broadly in line with expectations, and much better than the euro zone. Being a data heavy week we can expect another volatile session for the cable. PMI data from the three sectors would be closely watched out for. With the mixed data coming out of the US markets last week and large amount of data to be released this week we can expect the British Pound to sway in an extended range abound trade.


GBPUSD Spot 1.5237 1.5320 1.5399 1.5483 1.5563 SELL NEAR 1.549 TGT 1.5280 SL 1.5555

GBPINR-MCX-SX Mar-2015 95.20 95.52 95.87 96.53 97.22 SELL NEAR 96.10 TGT 95.05 TGT 96.45

GBPINR-NSE Mar-2015 95.20 95.52 95.87 96.53 97.22 SELL NEAR 96.10 TGT 95.05 TGT 96.45


British Pound Spot Technical Chart and Recommendation

British Pound Spot Review and Fundamental Outlook


6

Currency Insight

Japanese Yen traded on friday to close at 119.63 after the monthly data dump from Japan at the end of the week showed a continued decline in retail sales and consumer confidence. Japanese exports picked up in March from a year earlier, beating forecasts and offering hope that a weaker yen is starting to support a slow upturn in the export-reliant economy as business confidence continues to improve. Japan’s core consumer prices fell 0.5 percent in March from a year earlier, down for a fifth straight month, government data showed on Friday, suggesting the Bank of Japan faces a tough task to achieve its 2 percent inflation target. In the week ahead trades expect the Yen to depreciate further owing to the strength of the US dollar and the also the ECB starting its bond buying program.


USDJPY Spot 117.6075 118.2750 119.0300 119.5150 120.0875 BUY NEAR 119.20 TGT 120.4 SL 118.60

JPYINR-MCX-SX Mar-2015 51.66 52.00 52.11 52.69 53.04 SELL NEAR 52.38 TGT 51.72 SL 52.58

JPYINR-NSE Mar-2015 51.66 52.00 52.11 52.69 53.04 SELL NEAR 52.38 TGT 51.72 SL 52.58


Japanese Yen Spot Technical Chart and Recommendation

Asian Economy: Review and Fundamental Outlook


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Currency Insight

Date Time Country/Region Event Period Surv(M) Prior

Economic Data

03/02/2015 03/06 JN Official Reserve Assets Feb -- $1261.1B

03/02/2015 05:20 JN Capital Spending YoY 4Q 0.0 0.1

03/02/2015 05:20 JN Capital Spending Ex Software 4Q 0.1 0.1

03/02/2015 05:20 JN Company Profits 4Q -- 0.1

03/02/2015 05:20 JN Company Sales 4Q -- 0.0

03/02/2015 07:05 JN Markit/JMMA Japan Manufacturing PMI Feb F -- 5150.0%

03/02/2015 10:30 JN Vehicle Sales YoY Feb -- -0.2

03/02/2015 12:30 UK Nationwide House PX MoM Feb 0.0 0.0

03/02/2015 12:30 UK Nationwide House Px NSA YoY Feb 6.2% 6.8%

03/02/2015 14:25 GE Markit/BME Germany Manufacturing PMI Feb F 5090.0% 5090.0%

03/02/2015 14:30 EC Markit Eurozone Manufacturing PMI Feb F 5110.0% 5110.0%

03/02/2015 15:00 UK Net Consumer Credit Jan 0.9B 0.6B

03/02/2015 15:00 UK Net Lending Sec. on Dwellings Jan 1.7B 1.6B

03/02/2015 15:00 UK Mortgage Approvals Jan 61.0K 60.3K

03/02/2015 15:00 UK Money Supply M4 MoM Jan -- 0.1%

03/02/2015 15:00 UK M4 Money Supply YoY Jan -- -1.1%

03/02/2015 15:00 UK M4 Ex IOFCs 3M Annualised Jan -- 5.0%

03/02/2015 15:00 UK Markit UK PMI Manufacturing SA Feb 53.3 53.0

03/02/2015 15:30 EC Unemployment Rate Jan 0.1 0.1

03/02/2015 15:30 EC CPI Estimate YoY Feb 0.0 --

03/02/2015 15:30 EC CPI Core YoY Feb A 0.6% 0.6%

03/02/2015 19:00 US Personal Income Jan 0.4% 0.3%

03/02/2015 19:00 US Personal Spending Jan 0.0 0.0

03/02/2015 20:15 US Markit US Manufacturing PMI Feb F 5430.0% 5430.0%

03/02/2015 20:30 US Construction Spending MoM Jan 0.3% 0.4%

03/02/2015 20:30 US ISM Manufacturing Feb 5300.0% 5350.0%

03/03/2015 05:20 JN Monetary Base YoY Feb -- 37.4%

03/03/2015 05:20 JN Monetary Base End of period Feb -- ¥278.6T

03/03/2015 05:20 JN Loans & Discounts Corp YoY Jan -- 3.1%

03/03/2015 07:00 JN Labor Cash Earnings YoY Jan 0.0 0.0

03/03/2015 07:00 JN Real Cash Earnings YoY Jan -- 0.0

03/03/2015 12:30 GE Retail Sales MoM Jan 0.0 0.0

03/03/2015 12:30 GE Retail Sales YoY Jan 0.0 0.0

03/03/2015 15:00 UK Markit/CIPS UK Construction PMI Feb 5900.0% 5910.0%

03/03/2015 15:30 EC PPI MoM Jan -0.7% -1.0%

03/03/2015 15:30 EC PPI YoY Jan -3.0% -2.7%


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Currency Insight


Economic Data

03/03/2015 20:30 US IBD/TIPP Economic Optimism Mar -- 47.5

03/04/2015 05:31 UK BRC Shop Price Index YoY Feb -1.2% -1.3%

03/04/2015 07:05 JN Markit Japan Services PMI Feb -- 5130.0%

03/04/2015 07:05 JN Markit/JMMA Japan Composite PMI Feb -- 5170.0%

03/04/2015 14:25 GE Markit Germany Services PMI Feb F 5550.0% 5550.0%

03/04/2015 14:25 GE Markit/BME Germany Composite PMI Feb F 54.3 54.3

03/04/2015 14:30 EC Markit Eurozone Services PMI Feb F 5390.0% 5390.0%

03/04/2015 14:30 EC Markit Eurozone Composite PMI Feb F 5350.0% 5350.0%

03/04/2015 15:00 UK Official Reserves Changes Feb -- -$80M

03/04/2015 15:00 UK Markit/CIPS UK Services PMI Feb 57.5 57.2

03/04/2015 15:00 UK Markit/CIPS UK Composite PMI Feb -- 5670.0%

03/04/2015 15:30 EC Retail Sales MoM Jan 0.2% 0.3%

03/04/2015 15:30 EC Retail Sales YoY Jan 2.3% 2.8%

03/04/2015 17:30 US MBA Mortgage Applications 46419 -- -3.5%

03/04/2015 18:45 US ADP Employment Change Feb 218K 213K

03/04/2015 18:45 US

Revisions: ADP National Employment

Report

03/04/2015 20:15 US Markit US Composite PMI Feb F -- 5680.0%

03/04/2015 20:15 US Markit US Services PMI Feb F 57.0 57.0

03/04/2015 20:30 US ISM Non-Manf. Composite Feb 5650.0% 5670.0%

03/05/2015 00:30 US U.S. Federal Reserve Releases Beige Book

03/05/2015 05:20 JN Japan Buying Foreign Bonds 46419 -- ¥166.3B

03/05/2015 05:20 JN Japan Buying Foreign Stocks 46419 -- ¥297.4B

03/05/2015 05:20 JN Foreign Buying Japan Bonds 46419 -- ¥46.8B

03/05/2015 05:20 JN Foreign Buying Japan Stocks 46419 -- ¥289.0B

03/05/2015 12:30 GE Factory Orders MoM Jan -1.0% 4.2%

03/05/2015 12:30 GE Factory Orders WDA YoY Jan 2.6% 3.4%

03/05/2015 14:00 GE Markit Germany Construction PMI Feb -- 4950.0%

03/05/2015 14:30 UK New Car Registrations YoY Feb -- 6.7%

03/05/2015 14:40 GE Markit Germany Retail PMI Feb -- 5230.0%

03/05/2015 14:40 EC Markit Eurozone Retail PMI Feb -- 4660.0%

03/05/2015 17:30 UK BOE Asset Purchase Target Mar 375B 375B

03/05/2015 17:30 UK Bank of England Bank Rate 38412 0.5% 0.5%

03/05/2015 18:00 US Challenger Job Cuts YoY Feb -- 17.6%

03/05/2015 18:15 EC ECB Main Refinancing Rate 38412 0.1% 0.1%

03/05/2015 18:15 EC ECB Deposit Facility Rate 38412 -0.2% -0.2%

03/05/2015 18:15 EC ECB Marginal Lending Facility 38412 0.3% 0.3%

03/05/2015 19:00 US Nonfarm Productivity 4Q F -2.3% -1.8%

03/05/2015 19:00 US Unit Labor Costs 4Q F 3.4% 2.7%


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Currency Insight

Prepared by:-

Jitendra Parashar ([email protected]) - Technical Analyst

Rakesh Chelapareddy ([email protected]) - Fundamental Analyst

Disclaimer The information and views presented in this report are prepared by Karvy Stock Broking Limited. The information contained

herein is based on our analysis and up on sources that we consider reliable. We, however, do not vouch for the accuracy or the

completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The


Economic Data

03/05/2015 19:00 US Initial Jobless Claims 46784 295K 313K

03/05/2015 19:00 US Continuing Claims 44228 2390K 2401K

03/05/2015 20:15 US Bloomberg Consumer Comfort 36951 -- 4270.0%

03/05/2015 20:30 US Factory Orders Jan 0.2% -3.4%

03/05/2015 03/10 UK Halifax House Prices MoM Feb -0.2% 2.0%

03/05/2015 03/10 UK Halifax House Price 3Mths/Year Feb 8.5% 8.5%

03/06/2015 10:30 JN Leading Index CI Jan P 10580.0% 10560.0%

03/06/2015 10:30 JN Coincident Index Jan P 11220.0% 11070.0%

03/06/2015 12:30 GE Industrial Production SA MoM Jan 0.5% 0.1%

03/06/2015 12:30 GE Industrial Production WDA YoY Jan -0.2% -0.7%

03/06/2015 15:00 UK BoE/GfK Inflation Next 12 Mths Feb -- 2.5%

03/06/2015 15:30 EC Gross Fix Cap QoQ 4Q 0.3% -0.2%

03/06/2015 15:30 EC Govt Expend QoQ 4Q 0.1% 0.3%

03/06/2015 15:30 EC Household Cons QoQ 4Q 0.4% 0.5%

03/06/2015 15:30 EC GDP SA QoQ 4Q P 0.3% 0.3%

03/06/2015 15:30 EC GDP SA YoY 4Q P 0.9% 0.9%

03/06/2015 19:00 US Change in Nonfarm Payrolls Feb 235K 257K

03/06/2015 19:00 US Two-Month Payroll Net Revision Feb -- --

03/06/2015 19:00 US Change in Private Payrolls Feb 225K 267K

03/06/2015 19:00 US Change in Manufact. Payrolls Feb 11K 22K

03/06/2015 19:00 US Unemployment Rate Feb 5.6% 5.7%

03/06/2015 19:00 US Average Hourly Earnings MoM Feb 0.2% 0.5%

03/06/2015 19:00 US Average Hourly Earnings YoY Feb 2.1% 2.2%

03/06/2015 19:00 US Average Weekly Hours All Employees Feb 3460.0% 3460.0%

03/06/2015 19:00 US Underemployment Rate Feb -- 11.3%

03/06/2015 19:00 US Change in Household Employment Feb -- 75900.0%

03/06/2015 19:00 US Labor Force Participation Rate Feb -- 62.9%

03/06/2015 19:00 US Trade Balance Jan -$41.5B -$46.6B

03/07/2015 01:30 US Consumer Credit Jan $15.000B $14.755B

mailto:[email protected]

mailto:[email protected]


10

Currency Insight

investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment

decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary.

While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor any person

connected with any associated companies of Karvy accepts any liability arising from the use of this information and views mentioned in this

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Documents

Currency Research Desk - Karvy Commodities · January after a 0.5% decline in December, suggesting a possible turnaround after three years of decline. The German economy expanded