• New York FX back in the doldrums

Following decidedly ‘risk-on’’ Asian and European morning sessions, the whole of the G10 FX complex traded like USDJPY throughout the New York session, i.e., ‘nothing doing’. US stocks traded in positives territory but gains were meagre compared to earlier European market strength. In contrast, US credit markets continued to drink heavily from the New Year party punchbowl, with massive oversubscriptions being noted for debt offerings from the likes of Macy’s and SAB Miller. Other risk markets failed to take their cue from credit however, with NZD, AUD and CAD, the three main movers prior to the New York open, paring gains slightly albeit still showing gains against the USD averaging 0.75% into the close.

• IMF/Merkel meeting on-going; Greek PSI talks in focus

The meeting between IMF chief Christine Laggard and German Chancellor Angela Merkel was on-going at time of this update, keeping eurozone focus on reports out of Athens on the progress of talks between private sector creditors represented by IIF head Charles Dallara and public officials. Amid reports that a deal may be close,  entailing a 50% haircut for private creditors (but somewhat larger NPV losses depending on the coupon and maturing of the new bonds to be offered under a debt exchange) reports from one major wire service late Tuesday suggested that Greek and EU officials were prepared to drop voluntary restructuring procedures. Clarity is required. But if this means that so-called Collective Action Clauses are to be retrofitted into existing Greek-law bonds and which will effectively eliminate incentives for hold-outs such that we get a near 100% PSI take-up (but in a way that keeps the ECB’s bond holdings out of a PSI deal) and that this in turn clinches Greek bailout 2.0 (deemed necessary in order for disbursements to continue under Greek bailout 1.0), we should probably view this as EUR positive. While the link between euro-peripheral bond spreads and the euro has not been completely linear of late, agreement on PSI and a second bailout, and with that a diminution of Greek euro-exit risk,

Would be expected to see pressure on other euro peripheral bond markets subside at least temporarily. Obviously there is plenty of interim headline risk to contend with and scope for key euro crosses to plumb new depths, but equally, headlines suggesting that a PSI deal has been agreed could be expected to act as the catalyst for something of a short covering rally.

• Fed speaks makes up for data shortfall.

Ahead of key US Q4 earnings reports, and where JP Morgan’s results on Thursday are keenly awaited, there is not much on the data or events calendar Wednesday to get anyone’s pulses racing. Instead, we are promised comments from three. Fed officials and who span the complete spectrum of Fed views. Chicago Fed President Evans (arch-dove) is at one extreme and Philadelphia Fed President. Plosser at the other. They sandwich Atlanta Fed President Lockhart, who joins the FOMC voting line up this month (Evans and Plosser have both now come off the voting roster). This may give us some flavour of the range of forecasts likely to be published following the January 24 FOMC meeting (and where the views of all FOMC members, whether voting or not, will be included). Given the dovish hue to the voting FOMC line up this year, this creates some potential for a disconnect between the Summary of Economic Projections and FOMC policy decisions.

USD-INR JAN 2012 MCX-SX FUTURE:-Yesterday it openedat 52.7550& this itself was the high of the day.It had then fallen to 51.9400 to mark as low of the day & finally closed at 52.0075.For the day we see initialsupport at 51.70-51.75,resistance at 52.30-52.35&this is likely to be trading range of the day.Breach of the support at 51.70may lead to retest of 51.25-51.30.Similarly cross above of 52.35 may lead to retest of 52.55-52.60. Swing trader shouldgo shortaround 52.20 with the stop of 52.35.forthe target of 51.75 &51.30. 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 1.2763& made the high at 1.2818. It had then fallen to 1.2743 to mark as the low of the day & finally closed at 1.2777.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 1.2525-1.2550. Swing trader shouldgo short on breach of 1.2650 with the stop of 1.2680 for the target range 1.2525-1.2550. 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-SX FUTURE :- Yesterday it opened at 67.22& made the high of the day at 67.24It had then fallen to 66.45to mark as low of the day & finally closed at 66.5550.For the day we see supportat 65.50-65.60&resistance at 67.10-67.20 .Cross above of 67.20 will lead to retest of 67.50-67.60. In our viewaggressive  swing trader should go long around  65.75with the stop of 65.60 for the target of 67.20 & above.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 79.80-79.90& resistance at 81.00-81.10 .  In our view traders should go longaround 79.80with the stop of 79.60 for the target of 81.00 &higher.

JPYINR JAN 2012 MCX FUTURE :- For the day we see support at 66.60-66.70 & resistance at 68.30-68.40. In our view traders should go long on dip below 67.00 with the stop of 66.75  for the target  of  68.30 and higher.

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