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Theme of the Day
RBI released India's Q4'FY2013 BoP data today morning which showed that the current account deficit in the Jan-March quarter fell to 3.6% of GDP vs. 6.7% in the prior quarter.
View Today
DXY:
Dollar index is trading at 82.79 in trade today against yesterday's close of 82.97 levels. In key data releases, the US Commerce Department noted that the economy expanded at a slower pace of 1.8% qoq (annualized), compared with a previously reported 2.4%qoq (ann) pace. With the downward revision of Q1'2013 GDP data, the pressure of Fed QE tapering have eased somewhat. In terms of key data releases, market will focus on the consumer spending and jobless claims data, scheduled to release later today. Technically, intraday trend for the DXY is bullish with support and resistance at 82.60 and 83.00 respectively.
EUR/USD:
EURUSD cross is trading higher at 1.3031 levels in trade today against yesterday's close of 1.3012. The common currency witnessed losses in yesterday's trade after ECB officials made clear that any policy tightening remained a very distant prospect. ECB President Mario Draghi, stressed that the ECB was not preparing to start winding down stimulus, in contrast to the Federal Reserve. Meanwhile, the EURJPY cross was trading at 127.30 levels, recovering from a one-week low of 126.57 levels. The intraday trend for the Euro is bearish, with support and resistance at 1.30 and 1.3056 respectively.
GBP/USD:
GBPUSD cross is trading higher at 1.5342 levels in trade today as against yesterday's close of 1.5314. Broad based Dollar weakness in overnight trade is weighing on the Pound sterling. In terms of key data releases, UK is scheduled to announce final estimate of Q1 GDP and current account balance for Q1'2013. The intra day trend for the GBP/USD cross is bearish, with support and resistance at 1.5310 and 1.5360 respectively.
USD/JPY:
The Japanese Yen is broadly trading flat at around 97.72 levels in early morning today. The losses in Yen are capped given the overnight weakness in Dollar index, as slower-than-expected U.S. economic growth increased speculation the Federal Reserve will maintain stimulus. In terms of key releases, Japanese investors sold JPY 1187.5 bn in overseas bonds and notes while foreign investors sold JPY 1047.3 bn in Japanese bonds last week. Technically, the intra day trend for USD/JPY cross is bullish with support at 97.50 and resistance at 98.00.
USD/CHF:
USD/CHF is currently trading lower around 0.9413 compared to yesterday's close of 0.9431 amidst broad-based weakness in the US Dollar. Meanwhile, EUR/CHF remains flat at around 1.2270. The upside in the EUR/CHF is expected to be limited as ECB officials continue to stress that the European Central Bank intends to keep monetary policy accommodative. Going ahead, markets will look forward to KOF leading indicator data, due to be released tomorrow, for further cues. Technically, USD/CHF is expected to trade bullish with support at 0.9380 and resistance at 0.9450.
AUD/USD:
The Australian Dollar is trading higher at around 0.9339 compared to yesterday's close of 0.9277, amidst a broad retracement in the US Dollar. Meanwhile, reported month-end export-related inflows and short-covering are also aiding the currency. In related news, Labour Party leader Kevin Rudd took over as the new Prime Minister of Australia ahead of general elections in August. Technically, we expect AUD/USD to trade ranged with support at 0.9378 and resistance at 0.9384.
USD/CAD:
The Canadian Dollar is trading stronger for the first time in nine trading days amidst value buying and general weakness in the US Dollar. USD/CAD is currently hovering around 1.0431 compared to yesterday's close of 1.0470. The Canadian Dollar has also found support from the Bank of Canada's recent hawkish rhetoric. BoC official Lane said yesterday that possible overheating in Canada's housing market continued to pose risks, thereby raising speculation that the Central Bank might withdraw stimulus going ahead. Markets now await Canada's April GDP reading due to be released tomorrow. Technically, we expect USD/CAD to trade ranged with support at 1.0396 and resistance at 1.0450.
Sensex:
Indian stock markets opened higher tracking positive cues from Asian peers and overnight gains in Wall Street. The expiry of the June derivative contracts today is likely to keep trade choppy. Meanwhile, in yesterday's trade, Indian stocks ended lower as a sharp depreciation in the USDINR pair to above-60 levels weighed on rate-cut expectations. Selling pressure yesterday was largely seen in rate-sensitive stocks. Going ahead,
markets today would closely track developments in the Cabinet Committee on Economic Affairs (CCEA) and Cabinet Committee on Investment (CCI) meetings. The agenda for today includes the decision on gas pricing, minimum support price (MSP) for Kharif crops and the decision on setting up a coal-sector regulator among others. Markets will also eye intraday movements in the Rupee for further cues. Technically, Sensex is expected to trade ranged between 18200-18700.
USD/INR:
The Indian Rupee opened slightly stronger at 60.44 compared to yesterday's close of 60.71, tracking strength in the EM Asian currency pack and some correction in the Dollar today morning. A fall in the Q4 FY2013 current account deficit to 3.6% of GDP vs. previous quarter's reading of 6.7% of GDP is also likely to aid gains in the currency. However, the upside might be capped amidst month-end Dollar demand by oil importers. Overnight rise in crude oil prices might also weigh on the currency.
Possible intervention by the RBI intraday, however, may help contain losses in the currency. Meanwhile, in yesterday's trade the USDINR pair breached the psychologically important 60 level mark amidst heavy Dollar demand from oil importers. Further, reports emerged that foreign banks' stop-losses were triggered when the Rupee hit 60, thereby leading to further depreciation. The intraday trend for USDINR is bearish with support at 60.25 and resistance at 60.80.
G-Sec:
The Indian Government bonds are likely to find some support today amidst overnight gains in US Treasuries. A fall in the Q4 FY2013 current account gap to 3.6% of GDP from prior print of 6.7% of GDP is also likely to aid sentiment. The fresh supply of dated securities worth INR 140 bn, due on Friday, however, might limit the upside.
In yesterday's trade, the new 10-year benchmark yield rose by almost 9 bps as depreciation of the Rupee to a record low weighed on expectations of a rate cut by the RBI in its July meeting. Markets will closely track movements in the USDINR pair for further cues. The old 10-year bond yield, currently at 7.77%, is expected to trade in the range of 7.74%-7.80% while the new 10-year benchmark, currently at 7.55%, is expected to trade in the band of 7.52%-7.58%.
Oil:
Global crude oil prices are trading higher today morning on the back of a weaker Dollar. Meanwhile, in yesterday's trade, oil prices rose, with Brent gaining by 1.5% as persisting tensions in the Middle East weighed on the oil supply outlook. Gains in WTI were however limited after the US
Energy Department reported a rise in US crude inventories by 0.2 mn barrels for the week ended June 21st. WTI is trading at USD 96.1/bbl, vs. yesterday's close of USD 95.5/bbl. Brent is currently at USD 102.4/bbl vs. USD 101.7/bbl yesterday. Technically, Brent is expected to trade ranged between USD 101.25 -102.50/bbl.
Gold:
Gold prices are trading higher today morning, having recovered from yesterday's losses, aided by weakness in the Dollar. Further, speculation that the Fed might continue with its current pace of asset purchases for a longer time, following the weaker than expected US Q1 GDP (3rd estimate) print
released yesterday, is likely to keep prices supported. Meanwhile, in yesterday's trade, gold prices had slipped by nearly 4%. Prices are currently hovering around USD 1244.0/oz compared to yesterday's close of USD 1226.6/oz. Technically gold is expected to trade ranged between USD 1220-1270/oz.
Please find attached herewith a file containing the detailed analysis.
