USDINR View : Post FED minutes and its impact on world map.

Global equity markets fell on Wednesday after some Federal Reserve policy-makers said last month the central bank may have to stop or slow its bond-buying program before hiring picks up, while oil slid on the prospect of a boost in Saudi supply. Gold fell nearly 3 percent to a seven-month low in its biggest single-day drop in almost a year. The dollar rallied to session highs against the euro and the yen as some policy-makers said the Fed's monthly purchase of $85 billion in bonds under measures known as "quantitative easing," or QE, may end before improvement in the labor market occurs. Minutes of the Federal Reserve’s January meeting released Wednesday reveal that many Fed officials are worried about the costs and risks arising from the $85 billion–per–month asset-purchase program. And they all seem to have their own ideas on how to proceed.

Several Fed officials said the central bank should be prepared to vary the pace of the asset-purchase plan depending on the outlook or how the program was working. One wanted to vary it on a meeting-by-meeting basis.

“The minutes ... show a committee that is far less unified than at any other time in the past few years,” said Millan Mulraine, senior economist at TD Securities.

The Fed said a review of the program had been set for March. Fed Chairman Ben Bernanke will hold a press conference at the end of the two-day meeting on March 20.

Euro crumble & Yen holds the gain it made in previous session. With Dollar Index Inching towards 81.25, and pressure on Asian currency will keep Rupee on downside. For a while equity market across the globe looks vulnerable and may correct from these levels to atleast by 2-3%. The only relief Rupee could see will be from the Oil price as Brent is trading firm near to $115.20 despite a sharp correction in WTI prices yesterday. For a while in changing scenario we could expect rupee to fall towards 54.47/53 and even to level of 54.75, as earlier on Monday we reported. But as Economist suggest Fed defer to decide about QE3 & Bond Buying Purchase will indicate broader economic recovery in underway. In a short term market may back to fundamentals of economy and resume upside. So Far looking for weaker rupee and stronger Dollar.

With Inputs From Reuters and MarketWatch, Compiled By Amit Daga.

Please Read the Disclaimer posted earlier.

USDINR View & Outlook for Week 18-22 Feb13

USDINR:  On weekly chart in candle stick pattern, rupee can go down till 54.76 ideally. RSI is moderate and the pair can look for upper band levels of 54.50/76 and even further 54.88.Rupee likely to get support around 53.85, and on upside it can go further up to 53.67 on the breach of 53.85. The pair is trading above its 100 & 200 Day EMA on weekly basis, and the upper resistance channel is trending at 54.47. An ideal move in market could be first to reach its resistance level and after that corrected towards 54.05/53.93.

• ·         Despite Lower than expected inflation data released last week, RBI likely to maintain base rates in coming meeting schedule next month. Indication from Mr.D.SubhaRao clearly stating that the status on base rate likely to maintain non-change.
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• ·         Gold recovers from its 6 months low and may see pressure from demand side and on technical charts. Lower gold prices may put import pressure on rupee, as demand may pick up for investment purpose. However demand may likely to moderate as market is expecting some more correction in prices in near term.
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• ·         Brent oil prices are still a concern as its trading above the comfortable level of $115,Recent hike in petrol & diesel prices will keep the demand from OMC for oil and with rising oil prices input cost can put pressure on rupee. However on oil likely to correct on weekly chart.
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• ·         Dollar Index is up against its all major currency (basket of six) and trading above to its crucial support levels. A breach of 81.20 could lead for sell off in rupee.
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• ·         Billionaire George Soros dump half of his holding in SPDR gold trust fund, indicating bearish view on Gold as reported by CNN-Money. Mr.Soros also reportedly made almost $1B by betting against YEN since last Nov.
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• ·         G20 Meet in Russia ends last Week skip the criticism of Japan Government policies, virtually supported the Bond purchase of Japanese Govt, and further weaken YEN in early trade this Morning.G20 also discuss the new coined term “Currency War” in their meeting in Moscow. G20 nations agreed not to target their exchange rates in search of a competitive edge but the tensions that led to talk of a “currency war” remain. “We will refrain from competitive devaluation. We will not target our exchange rates for competitive purposes,” the G20 finance ministers said in a statement that echoed a similar call last week from the G7.

Mood In the Market USDINR

Mood in the market

USDINR Quoting 53.065 and made a low of 52.89 in today’s session after open at 52.96/97 down by 7 paisa from yesterday closing. Most of the brokerage firms are suggesting there clients to go short with Rupee Intra-Day and the active participant of foreign inflow keep the market on their side. Whereas previous session move in USDINR indicate some more points, it made high at 53.40 and recovers from that low to 53.13/14 and close to those levels. As GOI is raising money for NTPC, participation from foreign investor is quite witness in this stake sale, and weak demand from Importers are also keeping Rupee to upside. "The market is front running the inflows for the NTPC share sale and is expecting about $500 million to $700 million to come in, which should support the local unit," said Sudarshan Bhatt, chief currency dealer with the state-run Corporation Bank. n the sovereign debt market, the benchmark 10-year note ended higher helped by a broad investor aversion to risk. The session however was locked in a narrow range as the dealers awaited crucial data on gross domestic product, factory production and inflation in this week and the next.

But on technical charts USDINR likely to gain towards 53.27/38 and maintain strong resistance at 53.47. As yesterday strong selling of dollar comes from one private oil co. sources Reuters, more encashment on dollar will witness on every rise in rupee. Rupee can trade in a range of 53.28-52.84 in this week, as equity market also consolidating its recent gains. 

USDINR View for Feb13

USDINR outlook for Feb 13.

Rupee seems exceptionally better assets since the year starts, it has already up by more than 3.5% compare to 2% rise in equity market and negative return in gold & other assets YTD.

Coming Month on technical charts USDINR looks bearish towards 52.10/51.70 and may retest its OCT low at 51.35 in coming weeks. However trend line support at 53.85 could be the ideal resistance in this correction and it may test 53.40/55 in corrective pullbacks.

Strong inflow from FII and Forex reserve at $295.75B on account of stake sale in OIL India, strong equity market domestic as well international are supporting factors in rupee strengthening. Proposed cut in fiscal deficit and moderate tax laws indicate optimistic outlook on coming Budget. Big events like NTPC stake sale of amount Rs.12, 000cr and foreign investment in the stake sale will continue more inflows of dollar into system. Ruia brothers-owned- Essar Oil is taking a leaf out of Reliance Industries Ltd (RIL)’s book, starting road shows to swap its rupee loans worth $2.2 billion (Rs 11,700 crore) with dollar loans, thus taking advantage of the good appetite from investors for the Indian paper. Strong domestic & international equity market, weaker YEN & Strong Euro is main indicator for softening in Dollar/Rupee prices. If Brent Oil breach $119 in ICE, it could impact negative on rupee, however the impact could be lesser as demands from Importer of goods from China & Gold will decline this month. As China will be holidaying from 9^th feb till 15^th feb (Lunar New Year) and most of the work will start in the last week of month.

Recommendation:

Exporter: Book USDINR within range of 53.07/53.20, Rupee Likely to strengthen

Importer: On breach of 53.40 one can book dollar for 53.80, and continue if breach 53.80. View on Rupee is upside this month.

Broader Range: USDINR – 53.55/53.75-52.30/51.95.

Disclaimer : The above mentioned View is for publication and sharing purpose and guarantee no profit or loss in any form of trading.Kindly advise with your financial adviser before taking any decision. The writer of this blog does not entertain any liability arise in any circumstances.

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Why I am Bearish on Gold and not buying in this dip

Comex gold futures ended the U.S. day session sharply lower and hit a fresh 3.5-month low Tuesday. The gold market started to sell off in late-morning trading right about the time that U.S. House Speaker Boehner mentioned a "Plan B" on the fiscal cliff negotiations. Earlier in Morning trades Gold was flirting above $1700 and showing some week strength in prices although with thin volume. Exactly around 9.30 p.m IST I was circulating message regarding gold will be liquidating any time sooner when it come back to $1695, in next one hour gold was trading below $1670, the sell off rally was quite visible on chart with more conviction when eur/usd was up & usd/jpy breach 84 mark and gold was still holding in trading session.

And there a hopeful statement comes from US house speaker Boehner to settle down "fiscal cliff" with his plan B for short term. Boehner on Tuesday proposed what recently was the unthinkable for Republicans -- letting tax rates go up on income above $1 million as a short-term step to avoid some of the fiscal cliff while continuing to negotiate a broader deal. While the Republican speaker Plan "B" has less taker from both Sides White House spokesperson and republican both rejected the plan and moving towards more negotiation on fiscal cliff deal.

How it all affect Gold prices as of now, earlier gold was getting support from fiscal cliff uncertainty & what may be looking like another recession coming in US post Jan next year, but as there is a say in politics if u can't give them bread give them cakes. Both parties GOP & Tea party (republican & democrats) need to negotiate and comes to some conclusion where they both can stick to their respective politics and save the great dreams of US.

Now on technical charts gold is slightly negative which is now more confirmed by yesterday fall, rise in EURO & fall in JPY witness two major shift in market, first market is showing confidence in EURO zone & economy as a whole in next year, recently after Japanese P.M Shinzo Abe’s take charge of office, dollar got strength against JPY on account of likely monetary easing in Japan, JPY weakness also witnessed by strong inflow in equity market and rise in crude oil prices, however this all can lead to major shift of focus for investor in first half of 2013.

Investor sentiments are moving towards more safe assets like dollar, Euro & bonds. The strong U.S. economic recovery will surprises the market and especially gold investors, which flee the traditional safe haven investment. Additionally, lack of pick up in physical demand from China and India trigger a round of gold liquidation. Recent data from Hong Kong & Bombay Bullion indicate sharp decline in actual import on YOY basis.

with Gold prices likely to find support around $1633 and $1592 in short term, $1530 can't be ruled out in near term if yen continue to decline below 86. $1703 could be resistance level from here onward and could change the current trend to reverse & upside. We are expecting strong INR in coming days & below 53 by Jan'13, Since Jan'12 starting this year gold in INR has given return in double to its counter currency in dollar, this huge gap likely to widen down in 2013 with INR likely to appreciate. Therefore strongly recommend to sell Gold in MCX with closing s/l above 31820 with a target of 29150 in short term.

 

Gold also likely to adjust its ratio with other metals, specially with copper, as SEC approves JP Morgan's controversial Physical stocks backed Copper ETF, copper prices are likely to shoot up next year post JP launch its fund, whereas gold/copper ratios trading @450 levels, this could adjust to below 400 in coming times (compare to gold copper is more cheap in inflation adjusted pricing module, although one is precious metal and other is base metal but provided an investment opportunity copper is cheaper than gold at current prices).    

Disclaimer: Although this is just a report based on some facts & finding and not promoting for any trades, please take the utmost care before taking any trading decision.

With inputs from Kitco & CNN. Compiled by Amit Daga. 

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Regards

Amit Daga

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10 nations that control the world’s gold

10 nations that control the world’s gold