• USD starts of the week on a weaker note; EUR remains vulnerable to further downside

Even though equity markets displayed a very lacklustre performance on Monday, USD weakened across the board against

all G10 FX with NZD and SEK, the key out performers against USD. Markets were focused on German Chancellor Merkel

and French President Sarkozy’s press conference, but the two leaders revealed very little new information. In fact, they

reiterated their support for the financial transactions tax, discussed wrapping up negotiations among Eurozone countries this

month on a new fiscal pact to tighten budget discipline and reaffirmed their stance that private sector bondholders must

share in reducing Greece’s debt burden. EURUSD continues to trade below 1.2800, and prospects for EUR remain bleak

not only because of the potential headline risk but also from the EGB issuance this week totalling EUR21bn and the ECB

meeting on Thursday. Spanish bond and Italian t-bill auctions are scheduled for 12 January. As such, EUR crosses should

remain under pressure, especially against relatively liquid AAA sovereigns. As such, EURGBP is likely to continue to move

lower barring any retracements on oversold conditions.

•  New FOMC members set to speak this week

US earnings season kicked off this week with a downside surprise from Alcoa. While the Q4 earnings of these companies

will be important, their outlook for the upcoming year will be crucial in setting expectations. Also this week, 10 Fed members

are scheduled to speak including new 2012 voters, Pianalto (dove), Williams (dove) and Lockhart (dove). Their speeches

will be important as the market learns more about their views ahead of the 24-25 January meeting when the Fed is

expected to change its communication policy. Note that Fed’s Williams authored an academic paper titled “Revealing the

Secrets of the Temple” in which he argued that the Federal Reserve should be more open about its plans for interest rates.

Dovish talk from these new members is likely to have little impact on the markets since sentiment currently seems to be

steered by events out of the eurozone.

•  SNB head Hildebrand resigns and SNB reaffirms commitment to EURCHF floor

SNB head Hildebrand resigned even though he denied any wrongdoing in the scandal involving FX trades him and his wife

conducted last year around the time of the central bank interventions. The news led to a sell-off in EURCHF with the pair

dipping below 1.21100 as markets tried to test the SNB’s resolve of the EURCHF 1.20 floor. The SNB, however, reaffirmed

its commitment to the 1.20 floor and the SNB Council confirmed that SNB’s Jordan will take over as acting head. As long as

the SNB continues to reiterate its commitment to the EURCHF 1.20 floor, the impact on EURCHF should remain limited.

USD-INR JAN 2012 MCX-SX FUTURE:-Yesterday it openedat 53.65&this itself was the high of the day.It had then fallen to 52.7175 to mark as low of the day & finally closed at 52.7975.For the day we seesupport at 52.25-52.30 &resistance at 52.77-52.82.Swing trader shouldgo longaround 52.30on visible sign of reversal with the stop of 52.20for the target of 52.77& above. Kindly reduce the quantum of lot as stoploss used are wide due to volatility.Remember traders discretion & judgment of price behavior during the entry of trade  is vital for profitability of trade& this can be done at that moment of time only.

EURO-USD:-Yesterday it opened at 1.2714 & made the high of 1.2785. It had then fallen to 1.2667 to mark as the low of the day & finally closed at 1.2763.For the day we see initial support at 1.2650-1.2675 & resistance at 1.2830-1.2855.The breach 1.2650 will lead to retest of the 1.2550-1.2525. Swing trader should go short  around 1.2830 with the stop of 1.2869 for the target of  1.2675& 1.2550. Traders discretion & judgment of price rally top/price decline bottom while entering trade,  is vital for profitability of trade  & this can be done at that moment of time only. 

EURO-INR JAN 2012 MCX-SXFUTURE :- Yesterday it opened at 67.4245& made the high of the day at 67.5675.It then fell to 67.2250to mark as low of the day & finally closed at 67.3300.For the day we support at 66.40-66.50&resistance at 67.40-67.50 our view aggressive  swing trader should go short around 67.30  with the stop of 67.40 for the target of66.50.Once the trade runs in profit trail the stop suitably for exit so that profit is compounded & any higher target can also be taken advantage of it.

GBPINR JAN 2012 MCX FUTURE :-For the day we see support at 80.80-80.90& resistance at 81.60-81.70. In our view traders should go short around  81.60with the stop of 81.80  for the target of 80.80-80-90.

JPYINR JAN 2012 MCX FUTURE :- For the day we see support at 67.80-67.90 & resistance at 68.80-68.90. In our view traders should go short near 68.70 with the stop of 68.90  for the target range of  67.80-67.90 .

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