DAILY CURRENCY OUTLOOK (25-01-12)
After a day that didn’t see a whole lot of FX volatility in G10 (EURUSD oscillating in a one big figure range around the 1.30
Handle, USDJPY the biggest mover in what appeared to be an IMM-led move) and with no substantial news out of the EU
FinMin meeting or Greek PSI talks, stunning results from Apple after the close sets a risk-positive tone into Asia.
FOMC should be key for USD
Today’s key USD event should by rights be the FOMC outcome (12:30ET) and, ahead of the Ben Bernanke press conference (14:15ET) the wealth of information that will be contained within the latest Staff Economic Projections (SEP).These will contain forecast from all 17 FOMC members (so whether voters or not) including their individual (though unnamed) estimation for the year in which the Fed Funds Rate target will first be lifted. Our economists’ expectation for the latter is: 3 in 2013; 9 in 2014; 4 in 2015; and 1 in 2016. Key for USD reaction may whether the projections dislodge current consensus expectations for a first Fed move on rates around mid-2014 and where the short to intermediate segment of the US rates curve is currently priced. If Treasuries rally out the FOMC we look for the dollar to soften, and vice versa. Any vibe from the Fed chairman on the likelihood or otherwise of additional Fed balance sheet expansion is also going to be highly noteworthy, though may be hoping for too much (we think April will be the earliest date for any QE3 announcement, still a quarter away). Heading into the FOMC, our sense is that the USD will not move a whole lot of out it.
BoE Minutes, Q4 GDP keys for GBP
Minutes of the BoE’s January meeting should have a major bearing on expectations for an extension of the current QE
Program heading into the February MPC meeting; we expect an additional £75bn of gilt purchases to be announced then
And do not expect the minutes to disabuse us of that notion. Comments from BoE Governor King late Tuesday work with
The grain of this view (‘BoE can increase QE if needed’). Thus far in the Bank’s current QE programme, lower gilts yields have been as much a function of strong overseas (private sector) demand for gilts as much as they have about the reduction in supply from the Bank’s purchases. So lower yields have become synonymous with a stronger pound. Key then is going to be whether this private demand slows down, which in turn is in large part a function of whether more sovereign downgrades are likely elsewhere in the world. If they are, foreign demand for gilts is likely to stay strong, and QE may remain relatively impotent in bringing about a weaker currency. Also important today will be the first estimate of Q4 GDP and where confirmation of a return to negative growth is expected (consensus -0.1% q/q, -0.3%).
German Ifo can help EUR rally; Asymmetric AUD risks from Australia CPI
Following Tuesday’s much better than expected Eurozone ‘flash’ PMIs, confirmation of the veracity of the signal – for
Germany manufacturing in particular – will be sought from the German Ifo survey. Small increases are expected in all
three indices (business climate, current assessment and expectations) and if the survey supports the contention of ECB
Council member Mersch, that the European economy appears to be growing again, this can add support to the euro. Key
for AUD today will be the Q4 CPI estimates, though with a 25bp Feb rate cut priced in with a high degree of confidence
reaction is more likely from a significant upside surprise to the consensus (meaning ‘core’ measures well north of 2.5%).
USD-INR JAN 2012 MCX-SX FUTURE:- Yesterday it opened at 50.05 & made the high at 50.18 of the day. It had then fallen to 49.9725 to mark as low of the day & finally closed at 50.0875.For the day we see initial support at 49.70-49.80, resistance at 50.10-50.20 & this is likely to be trading range of the day. Breach of the support at 49.70 may lead to retest of 49.30-49.40. Cross above 50.20 will lead to head towards 50.40-50.50. Swing trader should go short on breach of 49.70 with the stop of 49.85 for the target of 49.40 & lower. Kindly reduce the quantum of lot as stoploss used are wide due to volatility. Remember traders discretion & judgment of price behaviour 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 1.3012 & made the high at 1.3063. It had then fallen to 1.2954 to mark as the low of the day & finally closed at 1.3033. For the day we see support at 1.2950-1.2970 & initial resistance at 1.3130-1.3150.The cross above 1.3150 will lead to retest of the 1.3200-1.3220. Swing trader should go long around 1.2980 with the stop of 1.2950 for the target 1.3150 & 1.3220 . 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 65.145 & made the high at 65.765 of the day. It had then fallen to 65.00 to mark as low of the day & finally closed at 65.14. For the day we see support at 64.60-64.70 & resistance at 65.40-65.50.Cross above of 65.50 will lead to retest of 66.00-66.10. In our view aggressive swing trader should go LONG around 64.85 with the stop of 64.70 for the target of 65.40 & 66.00. 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 77.55-77.65 & resistance at 78.40-78.50 .Cross above 78.50 will lead to retest of 78.90-79.00. In our view traders should go long around 77.90 with the stop of 77.70 for the target of 78.50 & 79.00.
JPYINR JAN 2012 MCX FUTURE :- For the day we see support at 63.50-63.60 & resistance at 64.90-65.00 Cross above 65.00 will lead to retest of 65.40-65.50 In our view traders should go SHORT around 64.50 with the stop of 64.65 for the target of 63.60 & lower.
PIVOTPOINT-TABLE
| Index/Stock | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| USDINR | 49.7725 | 49.8725 | 49.9800 | 50.0800 | 50.1875 | 50.2875 | 50.3950 |
| EURINR | -87534.9067 | -43734.9533 | -21834.9067 | 21965.0467 | 43865.0933 | 87665.0467 | 109565.0933 |
| GBPINR | 77.2892 | 77.5008 | 77.7267 | 77.9383 | 78.1642 | 78.3758 | 78.6017 |
| JPYINR | 64.3050 | 64.5225 | 64.6825 | 64.9000 | 65.0600 | 65.2775 | 65.4375 |
ECONOMIC CALENDAR
| country | date | name | consensus | previous | volatility |
| India | 20120125 07:30:00 | M3 Money Supply |
| 15.60% | 1 |
| Japan | 20120125 23:50:00 | Corporate Service Price (YoY) | -0.10% | -0.20% | 1 |
| United Kingdom | 20120125 09:30:00 | Bank of England Minutes |
|
| 3 |
| United Kingdom | 20120125 09:30:00 | BBA Mortgage Approvals | 35.3K | 34.7K | 2 |
| United Kingdom | 20120125 09:30:00 | Gross Domestic Product (QoQ) | -0.10% | 0.60% | 2 |
| United Kingdom | 20120125 09:30:00 | Gross Domestic Product (YoY) | 0.80% | 0.50% | 2 |
| United Kingdom | 20120125 09:30:00 | Index of Services (3M/3M) | 0.40% | 0.20% | 1 |
| United Kingdom | 20120125 09:30:00 | MPC vote Cut |
|
| 3 |
| United Kingdom | 20120125 09:30:00 | MPC Vote Hike |
|
| 3 |
| United Kingdom | 20120125 09:30:00 | MPC Vote Unchanged |
|
| 1 |
| United Kingdom | 20120125 11:00:00 | CBI Industrial Trends Survey - Orders (MoM) | -18% | -23% | 1 |
| United States | 20120125 12:00:00 | MBA Mortgage Applications |
| 23.10% | 1 |
| United States | 20120125 15:00:00 | Housing Price Index (MoM) | 0.10% | -0.20% | 1 |
| United States | 20120125 15:00:00 | Pending Home Sales (MoM) | -1.00% | 7.30% | 1 |
| United States | 20120125 15:30:00 | EIA Crude Oil Stocks change |
| -3.438M | 1 |
| United States | 20120125 19:15:00 | Fed Interest Rate Decision | 0.25% | 0.25% | 3 |
SPECIAL NOTE:- We would earnestly request the readers to read carefully the qualifying conditions for the call to be activated. Without meeting the qualifier conditions call do not get activated & simply cursory look at chart & arrow may lead to erroneous call activation & financial losses.
THIS IS THE PORTRAY OF GENERAL BROADER MARKET VIEW WITHOUT ANY SPECIFIC STRATEGY & SHOULD NOT BE CONSTRUIED AS SPECIFIC CALLS.FOR THE MORE POIGNANT VIEW ON MARKET,WINNING STRATEGY & PIN POINT TIMELY PRICE LEVEL CALLS, CONTACT US TO SUBSCRIBE FOR OUR PREMIUM SERVICES.WRITER WELCOMES ANY SUGGESTIONS,FEEDBACK OR QUERY AT INFO@JKDVIEWPOINT.COM.
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