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Forex
Forex

Forex (522)

Rupee fell to 61.65 in early trades after a day holiday. The currency weakened mainly on global cues and widened trade deficit.

On Tuesday evening Ministry of Statistics released trade balance data which widen by 4.41b rupees mainly due to increase in import of Gold. Total imports increased by 26% while exports by 2.7%. Trade gap increased more than double compare to last year.

At global market dollar fell against major currencies as U.S. economic data came below estimations yesterday. It has also been changing views of investors on first interest rate hike by Fed. Now some players are expecting first hike at the end of 2015. Dollar index is down by 0.12% to 85.04 at 0700 GMT. The dollar has a high risk of falling versus the yen and adding to its biggest slide in six months, according to JPMorgan Chase & Co., with global markets roiled by concerns that growth and inflation are slowing.

Asian markets were down on market opening tracking the U.S. market. Market players are also concerned about declining growth of Eurozone that could also slow down global markets.

We may see some recovery in dollar if todays economic releases of jobless claims, industrial production and philly fed manufacturing index beat expectations. Rupee is likely to remain in range of 60.20 to 60.80 in this week looking at domestic as well as macro fundamentals.

 

Rupee opened marginally higher at 61.38 against 61.45.

Rupee opened appreciated today as domestic as well as Asian markets gained. All of the major Asian stock markets are trading positive on the expectation of further investment by Japan pension investment fund and better than expected U.S. GDP.

Yesterday U.S. Bureau of Economic Analysis released Advance GDP data which came better than forecast at 3.5%. Improving U.S. economy strengthened dollar against its major peers pushing it towards its three year high.

Today India will release fiscal deficit data for September. Drop in oil prices likely to help government to narrow the fiscal deficit that may support rupee. Next week India will also release Manufacturing and Service PMI data.

Increasing investment of FII and governments reforms may further support rupee. Month end oil importers buying may depreciate rupee today but the currency is expected to trade in the range of 60.90 to 61.90/62. Above the resistance of 61.90 we may see further depreciation to 62.50.

 

Wednesday, 08 April 2015 04:11

Rupee little gained as dollar weakens

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Rupee opened high as long winning streak of dollar ended. The currency opened on 61.355 against Mondays close of 61.405.

Dollar index reached at four year high on Monday due to changing global monetary policies and positive reading of U.S. economic data. DXY weakened as factory orders and trade deficit widened yesterday.

U.S. Factory Orders fell to -0.6% against expectation of -0.4% and trade gap widened at $43.0b for September compare to $40b in August.

Dollar selling by traders has also stopped USD rally in international market. Profit booking may show some recovery in EUR and JPY.

HSBC will release India Service PMI today which is expected at 1030 India time. Expansion in the index may further strengthen the currency. Earlier this week Manufacturing PMI changed a little and came to 51.6 for October from 51.0 in Sept.

Rupee is likely to trade within range of 60.90 to 61.80. We may not see major movement in intraday trading.

 

 

This month policy meet taking place after weaker economic releases and increasing discomfort among Governing Council members with ECB President Mario Draghi's leadership style.

In this meet pressure on ECB President Mario Draghi will increase to ease further as the euro zone has shown disappointing data since last meet.

European commission has also reduced growth forecast to 1.1% from 1.7% provided just six months earlier. It shows that hope of recovery in Euro area may get stalled with slowing down growth. Alongside the decision by BoJ to inject further liquidity into the market may also push ECB to ease more to strengthen the economy.

Gradually changing U.S. economic scenario and Republican Party's election victory backed the dollar and saw record closing highs on Wednesday for the Dow and the S&P 500. U.S. nonfarm employment data may through further light on labor market condition tomorrow which is one of the indicators Fed is looking at.

Traders are waiting for comments of ECB president in the conference to get clues on Euro economic growth and how the economy will recover.

ECB Projection will also remain in watch which will be released on 13th Nov.

 

Wednesday, 08 April 2015 04:08

Dollar strengthens before nonfarm payroll data

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Dollar index gained to 88.17 and changed a little as market is expecting increase in jobs for last month.

Today Bureau of Labor Statistics will release Non-Farm Employment data at 1430 GMT which is expected to increase by 235k compare to 248k of Sept. Unemployment rate is expected to remain unchanged at 5.9%. Later today Fed chair Yellen will address audience on Central Banking: The Way Forward?" in Paris.

Improving labor market is likely to strengthen dollar. Waning effects of financial crisis and improving business surveys may help fed to take decision on interest rate.

Earlier in this month manufacturing PMI increased by 2.4 points to 59.0 and the Employment index in this PMI improved by 0.9 percentage points. In Service PMI little fell of 1.5 points was reported but employment index improved by 1.1 percentage point to 59.6.

On Wednesday ADP nonfarm data has also posted increase of 278k jobs for last month and yesterday jobless claims fell by 10k to 288k for last week, all suggesting improvement in labor market.

Investment in dollar and equity market is likely to continue as commodity prices are continuously coming down and major currencies are weakening against dollar.

We may see dollar index crossing five year high if the U.S. economy reports better growth in coming weeks.

 

Wednesday, 08 April 2015 04:07

Rupee weakens in closing hours

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Rupee opened high and closed at 61.63 against dollar as dollar index reached near to four and half year high.

Rupee opened low at 61.52 against Wednesday close of 61.41 and continued depreciation up to 61.6750 or 0.37%.

The currency remained very stable in last two weeks and remained within the range of 61.20 to 61.50 but after surprising move of BoJ of increasing bond purchase amount three times more than present pace depreciated rupee a little as dollar strengthened most against JPY. Then after yesterday, with the expectation of further easing action by ECB euro weakened near to the level of two year low and further strengthened USD. Today market is waiting for U.S. nonfarm payroll and unemployment rate release.

At 1430 GMT U.S. Bureau of Labor Statistics will release nonfarm employment data which is expected to increase by 235k compare to 248k in Sept. Unemployment rate is expected to remain unchanged at 5.9%. Later today Fed chair Yellen will address audience on Central Banking: The Way Forward?" in Paris.

Earlier in this month manufacturing PMI increased by 2.4 points to 59.0 and the Employment index in this PMI improved by 0.9 percentage points. In Service PMI little fell of 1.5 points was reported but employment index improved by 1.1 percentage point to 59.6.

On Wednesday ADP nonfarm data has also posted increase of 278k jobs for last month and yesterday jobless claims fell by 10k to 288k for last week, all suggesting improvement in labor market.

Investment in dollar and equity market is likely to continue as commodity prices are continuously coming down and major currencies are weakening against dollar.

Easing by BoJ and ECB will increase liquidity in the market that may bring speculative money to emerging economies. In that sense rupee may strengthen with increase in foreign investment.

 

Wednesday, 08 April 2015 04:07

Dollar weakens after weak job data

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Dollar index fell little by 0.17% to 87.36 as jobs data on Friday came below estimated.

On Friday Bureau of Labor Statistics reported increase in jobs by 214k, less than expectation of 235k. But jobs have been increasing nearly 200k for last six months in the economy. Unemployment rate fell to 5.8% from 5.9% and there was not seen major change in earnings which came at 0.1%. It indicates moderate change in labor market and there may not come any change in Fed policy outlook.

Rupee opened high at 61.52 from previous close of 61.63. India will release CPI and Industrial Production data on Wednesday. CPI is expected to fall further to 6.20% for Oct from 6.46% that may support the currency but Industrial Production is likely to remain unchanged at 0.4% which is the matter of concern.

Traders are still having bullish view on USD as the economy is recovering and growth engines of other major economies are slowing down. They are viewing this movement in dollar as correction and expecting bullish trend to continue.

Asian markets have also gained after the U.S. data release. Movement in equity market with flow of foreign investors may also determine the rupee range. Today we may see rupee within the range of 61.30 to 61.70.

 

Rupee weakened little in morning trading as dollar strengthened against major currencies. Dollar index which measures performance of dollar against basket of six major currencies gained by 0.06% to 87.64.

Today India Ministry of Statistics will release Consumer Price Index after market hours. Inflation is expected to cool further to 5.67% from earlier 6.46%.Indial will also release Industrial Production which is expected to remain unchanged at 0.4%.

If CPI comes as estimated then it would reach at its lowest. Cooling oil and commodity prices supporting government to control inflation and deficit. Continuous fall in oil prices likely to improve trade balance and falling agricultural commodity prices may reduce food inflation.

The dollar has strengthened over 7 per cent over the last four months, but the rupee has remained within the 58-62 a dollar range mainly due to over 30 per cent fall in crude prices and continued restrictions on gold imports. Rupee has remained the best performer among emerging economies in this year.

Market is expecting that the fall in CPI may urge RBI to cut interest rate earlier than what is expected. It has already appreciated bank stocks in the market.

Foreign investors have bought shares worth $1.3 billion in November, taking total inflows so far in 2014 to $14.96 billion. Net inflows into debt in the year stand at $22.9 billion.

Rupee has reacted more quickly to dollar compare to oil prices as seen historically and dollar is expected to strengthen further which is the matter of concern. But RBI governor may not let rupee depreciate heavily as observed from his earlier interventions.

In near term rupee is expected to trade in the range of 61-62 a dollar.

 

Rupee opened marginally high after yesterdays positive reading of Consumer Price Index and Industrial Production.

Rupee opened at 61.486 a bit higher than yesterday close of 61.51 as Inflation came down to 5.52% for October compare to earlier 6.46%. Falling inflation is a good sign for economy. Industrial Production also improved to 2.5% against last 0.4%. We may not see heavy appreciation in rupee as state run banks are buying dollars at lower levels.

Continuous fall in oil and food prices in last two months has pushed inflation down. Market players are expecting RBI to cut interest rate sooner than estimated. Bank stocks rallied yesterday on the same expectation and market indices touched record levels.

Strengthening fundamentals and continuous flow of foreign fund is expected to support rupee. In November, foreign funds have bought shares worth $1.36 billion and debt worth $597 million, making total inflows so far this year of $15.1 billion and $23.1 billion in the two asset classes respectively.

Tomorrow Indian Ministry of Commerce and Industry will release Wholesale Price Index which is expected to fall further at 2.27% from 2.38%. RBI will also release forex reserve data.

The currency is expected to trade within the range of 61 to 62 in coming days.

Wednesday, 08 April 2015 04:00

Rupee weakens on dollar demand

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Rupee opened low at 61.61 against yesterday close of 61.56 and continued depreciation to 61.79 on dollar demand.

The domestic unit did not get cushion of less than expected Wholesale Price Index. WPI fell to 1.77% for Oct against 2.38% of Sept. The level is the lowest since Oct 2009. On Wednesday CPI and Industrial Production also beat analysts' forecast but it did not provide much support to rupee against strong dollar.

Dollar buying by State run Banks and the Central Bank might have brought sudden movement in rupee. Strong demand of dollar from importers also overshadowed foreign inflow effect on rupee.

FII flow in debt and equity market has remained continue. In this month, FII inflows in equities totaled at $1436.84 million as on 13th November 2014. Year to date basis, net capital inflows stood at $15127.36 million as on 13th November 2014.

Dollar index reached near to four year high at 88.07 and changed a little to 87.907 at 0307 IST. The dollar reached at seven year high against Yen at 116.40 today as Japan PM Abe may call a snap election next month in an effort to push through his reforms.

Today U.S. will release Retail and Core Retail Sales data which are expected to improve and may underpin dollar. Weakness in major currencies, Gold, Oil and other commodities are increasing investment in haven currency.