Currency Outlook 23rd December

CURRENCY OUTLOOK

SWASTIKA INTELLIGENCE GROUP 23rd December, 2013

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Rupee traded on a stronger note this week due to the positive impact of the RBI monetary policy on the Indian markets. However, slight weakness was seen after Fed announce QE taper to the tune of $10 billion from its current $85 billion bond purchase program. Domestically, upbeat equity markets after a small correction in response to the Fed’s monetary policy helped rupee gain on the last trading day of the week. Rupee gained 0.16 percent against the dollar in futures on Friday and closed at 62.2150. The spot rate is currently at 62.04. Dollar Index strengthened from 80.02 levels during the week post Fed’s announcement of $10 billion QE taper and closed at 80.5540 on Friday. The US economy in the third quarter grew at its fastest rate in nearly two years and much better than previously estimated. Higher consumer spending was largely responsible for the economy's annual growth rate of 4.1 percent from July through September up from 3.6 percent in the previous quarter. The US price index for gross domestic purchases increased 1.8% in the third quarter. Overall, we expect rupee to trade on a neutral to negative note against the dollar taking cues from stronger dollar index and positive economic data from USA. However, upbeat domestic market sentiments could cap sharp gains in the dollar and even reverse the trend. Technical Outlook: As seen on the intraday charts, USDINR is near an important support of 62.20. If it breaches this level on the downside, then it may head towards the 61.95 mark. If it bounces upwards from this level then, 62.60 will act as a crucial resistance.

FIIs invested a total of Rs. 2265.38 crores in the cash and derivatives market of India on Friday. India's foreign exchange reserves fell by $192.8 million to $295.51 billion during the week ended December 13, due to decline in currency assets. The currency assets stood at $268.56 billion. The value of gold reserves was $20.6 billion.

MARKET OVERVIEW

USD INR

CURRENCY OUTLOOK



In the futures rupee gained 0.33 percent against the Euro and closed at 84.9300 on Friday. The spot rupee closed at 84.74. On a monthly basis the German PPI fell 0.1% in November in line with forecasts, up from the 0.2% drop in October. On an annual basis PPI slid 0.8% in November, after dropping 0.7% in October, as expected. Consumer sentiment in Germany improved in December and optimism about the economy's future in January surged, an index measuring German consumer confidence and rose to 7.6. Overall, it is expected that rupee will trade on a neutral to positive note against the Euro due to international weakness in Euro as a result of strong DX. However, positive economic data from Euro zone will cap sharp gains in the rupee. Technical Outlook: As seen on the daily chart EURINR is near the support at 84.86. If it breaches this support then it will head towards the 84.60 mark. On the upside, 85.50 is a crucial resistance.

In the futures rupee gained 0.36 percent against the GBP on Friday and closed at 101.6150. The spot rupee closed at 101.24. UK current account deficit gap widened to a 24-year high to 20.7 billion from 6.2 billion in the previous quarter. Final GDP in UK grew at 0.8 percent confirming previous estimates. Overall, we expect rupee to trade in a range against the GBP taking cues international weakness in pound and strength in dollar index. Upbeat domestic market sentiments may help rupee to strengthen marginally. Technical Outlook: As seen on the daily chart, GBPINR has bounced back from the resistance at 102.23 mark. It is likely that the counter will head towards the support level of 100.80 during the week. If it breaches the 102.12 mark on the upside, then 102.48 will be an immediate resistance.

GBP INR

EUR INR

CURRENCY OUTLOOK



In the futures rupee gained 0.42 percent against Yen, and closed at 59.6425 on Friday. The spot rate of JPY INR is currently at 59.62. The dollar reached a five-year high against the yen on optimism U.S. economic growth will outperform Japan’s next year. The yen declined for an eighth week against the greenback after the Bank of Japan retained its plan to add 60 trillion yen ($574 billion) to 70 trillion yen a year to the monetary base. We expect Yen to trade on a neutral to negative note against the rupee due to international weakness in Yen, rallying Japanese markets and Bank of Japan’s decision to keep its monetary policy unchanged. Technical Outlook: As seen on the intraday chart, JPYINR is near the support at 59.60 mark. If it breaches this level, then it is likely that it will test the level of 59.20. However if it bounces towards upside from this support then, 60.60 is a crucial resistance.

Currency Event

7:00 PM Core PCE Price Index m/m

7:00 PM Personal Spending, Personal

Income m/m

8:25 PM Revised UoM Consumer Sentiment

8:25 PM Revised UoM Inflation Expectations

RBI REFERENCE RATES: ALL CURRENCIES

Currency Rate Previous close %

Change

USD INR 62.2420 62.3800 -0.22

GBP INR 101.8092 102.1535 -0.34

EUR INR 84.8774 85.2945 -0.49

JPY INR 59.5900 59.9800 -0.65

ONLINE TRADE: ALL CURRENCIES

Instrument Underlying Turnover

(Cr) Open

Interest

Futures USD INR 6552.64 779479

Options USD INR 2982.08 562509

Futures GBP INR 641.98 29982

Futures EUR INR 442.77 61209

Futures JPY INR 115.12 11527

Total 10734.59 1444706

JPY INR

KEY STATISTICS: 20th December 2013

IMPORTANT ECONOMIC DATA TODAY

CURRENCY OUTLOOK



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CURRENCY CONTRACT S2 S1 LTP R1 R2 TREND

USDINR December 61.7900 61.9900 62.2250 62.6000 62.8400 Sideways to Bullish

EURINR December 84.5000 84.7400 84.9675 85.2900 85.5000 Sideways to Bearish

GBPINR December 100.9200 101.2700 101.6750 102.0200 102.3000 Sideways

JPYINR December 59.2200 59.4000 59.6250 59.8400 60.2000 Sideways to Bearish

Report Prepared by Designation E-mail ID Sonakshi Bahety Research Associate [email protected]

RESEARCH TEAM SWASTIKA INTELLIGENCE GROUP [email protected] Ronak Choubey Fundamental Analyst [email protected] Santosh Meena Derivative & Technical Analyst [email protected] Amit Khare Commodity Analyst [email protected] Vishnu Shreekar Commodity Analyst [email protected] Saloni Gupta Research Associate [email protected]

CURRENCY TRACKER: 23rd December 2013

Economy & Finance

Currency Outlook 23rd December