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Theme of the Day
Fed official Fisher, who had earlier voiced support for QE tapering, commented that talks of reducing the Fed's bond-buying programme have been undermined by the fiscal discord in the US
View Today
DXY:
Dollar index is trading ranged at 79.67 levels in trade today against previous day's high and low of 79.76 and 79.47 respectively. The US Treasury secretary Lew noted that the political drama surrounding the debt limit hurt the US economy and must not be repeated. Meanwhile, Fed official Fisher, considered a hawk,
commented that talks of reducing the Fed's bond-buying programme have been undermined by the fiscal discord in the US. Markets will watch for the NFP data, scheduled to release tomorrow for further cues. The intraday trend for the Dollar is ranged, with support and resistance of 79.47 and 79.92 respectively.
EUR/USD:
The Euro is holding on to most of the gains in the last week and currently trading at close to 1.3680 against USD, as against Friday's high of 1.3704. Although there was no major macro-economic data released on Friday, political developments over the weekend are notable. Germany's Social Democrats (SPD) confirmed their decision to start negotiating as junior coalition with Chancellor Merkel. About 85% of SPD voted to start
coalition negotiations with Merkel's bloc this Wednesday (Oct. 23, 2013). The SPD Chairman said that his party would aim to form a government by Christmas. The SPD delegation also said that a nationwide minimum wage of EUR 8.50 (USD 11.63) an hour as well as shoring up pensions and investing in roads and schools will be "essential" to win their coalition. The intraday trend for the Euro is bullish, with support and resistance at 1.3650 and 1.3700 respectively.
GBP/USD:
Sterling also continues to trade strongly at 1.6160 against USD, but slightly weaker from Friday's intra-day high of 1.6225. According to Rightmove Plc., London house prices rose to an unsustainable rate in October as demand from overseas investors added pressure to a market with an already small supply of properties. In comparison, there is no risk of a property bubble
outside of London, Rightmove said. In another development, Bank of England's policy maker Ben Broadbent said that officials will only consider an interest rate hike once the recovery is secure, with inflation unlikely to prompt monetary tightening earlier than they have signalled. The intra day trend for the GBP/USD cross is bullish with support and resistance at 1.6130 and 1.6200 respectively.
USD/JPY:
Japanese Yen is currently trading close to 98.0 against USD, weaker than last week's close of 97.72. A weaker-than-expected growth in Japanese exports in September led to this weakness in JPY. Japan's exports increased 11.5% YoY last month, as against the consensus of 15.6%.
In comparison, imports jumped 16.5%. Consequently, there was a trade deficit of 932.1 bn Yen (USD 9.5 bn), as against 568.2 bn Yen in September last year. Technically, the intra day trend for USD/JPY cross is ranged with support at 97.70 and resistance at 98.20.
USD/CHF:
USD/CHF is currently trading slightly higher around 0.9027 compared to Friday's close of 0.9017 amidst a mild recovery in the US Dollar today morning. The Franc has also weakened vis-à-vis the Euro as major political parties in Germany made progress towards negotiating a coalition Government, thereby raising hopes of
continued political stability in Eurozone's biggest economy and thus weighing on the safe-haven appeal of the Franc. EUR/CHF is currently hovering higher around 1.2350 compared to Friday's close of 1.2343. Technically, USD/CHF is expected to trade bearish with support at 0.9000 and resistance at 0.9070.
AUD/USD:
The Australian Dollar is currently trading slightly lower at around 0.9664, compared to Friday's close of 0.9677, consolidating after making gains in each of the last eight trading sessions. Earlier, the Australian Dollar had risen by 0.4% on Friday, aided by a largely positive
GDP report from its largest trading partner, China. Going ahead, markets look forward to Australia's Q3 CPI inflation data, due to be released on Wednesday. Technically, we expect AUD/USD to trade bullish with support at 0.9636 and resistance at 0.9703.
USD/CAD:
The Canadian Dollar is trading slightly weaker today morning amidst profit-booking, following gains in the last three trading sessions. USD/CAD last week fell by 0.6% to close at 1.0286 amidst speculation that Fed QE-tapering would be deferred by more than previously expected.
USD/CAD today morning is trading slightly higher around 1.0294 (+0.08%). Going ahead, markets will await cues from important US data releases this week. Technically, we expect USD/CAD to trade bearish with support at 1.0270 and resistance at 1.0320.
Sensex:
Indian stock markets opened higher this morning, tracking positive overseas cues. Focus intraday is likely to be on the Q2 FY2014 earnings results by Asian Paints, HDFC and Zee
Entertainment. Meanwhile, in Friday's trade, domestic equities had ended at near a 3-year high on the back of value buying in banking and metal shares. Technically, the Sensex is expected to trade in the range of 20,650-20,950.
USD/INR:
The Indian Rupee opened slightly weaker at 61.34 vs. previous close of 61.27, tracking losses in other EM currencies. In the absence of any other macroeconomic triggers, the currency will eye movements in domestic equities for further cues. Further, the Rupee market will take cues from Asian
Paints, HDFC Ltd, Tata Coffee, etc. quarterly results for further cues. Technically, USDINR is expected to trade ranged with support and resistance at 61.05 and 61.50 respectively.
G-Sec:
The Indian Government bonds opened stronger this morning, extending Friday's gains. On Friday, the Gilts gained after RBI clarified that the Dollar swap window for oil marketing companies would remain operational. Also, FIIs
raised holding of rupee-denominated debt by USD 2.4 mn to USD 26.09 bn on Oct. 17. The yield on the benchmark 7.16% bond due 2023 is currently at 8.54% vs. previous close of 8.55%. The benchmark yield is expected to hover ranged between 8.50-8.60%.
Oil:
Oil prices are trading little changed today morning, holding on to previous session's gains. The overall oil demand outlook has improved in the recent trading sessions on two counts: first, the fiscal standoff in the US has been resolved and second, China- the second largest oil consumer- recorded a firm Q3 2013 GDP growth of 7.8%
YoY. In Friday's trade, Brent had gained by 0.76%. Brent is currently at USD 110.0/bbl vs. Friday's close of USD 109.9/bbl. Currently, WTI is trading at USD 100.8/bbl, largely unchanged from Friday's close. Technically, Brent is expected to trade ranged between USD 109.2 -110.7/bbl.
Gold:
Gold prices are trading marginally higher this morning, extending recent gains. Speculation that the Fed will postpone QE tapering more than previously expected is aiding bullion prices. Prices also remain supported on account of fairly stable investment demand for the metal.
Holdings in the SPDR Gold Trust held steady for the second day at 882.2 MT. Today morning spot gold is currently at USD 1,318.5/oz vs. Friday's close of USD 1,316.3/oz. Technically gold is expected to trade ranged between USD 1,295-1,320/oz.
Please find attached herewith a file containing the detailed analysis.
