Tuesday, May 24, 2011

Forex markets : Intraday Outlook and Strategy

The Indian rupee hit its weakest level in more than two months on Monday pressured by weakness in local equities along with US dollar pullback.  The immediate expiry May contract closed at 45.29, after posting an intraday high of 45.36.

Symbol
Series/Expiry
Open
High
Low
Close
Chg
% Chg
OI
Vol
USDINR
27-May-2011
45.1500
45.3625
45.1175
45.2975
0.2500
0.55%
634,252
3,599,910
USDINR
28-Jun-2011
45.3500
45.5675
45.3100
45.5050
0.2300
0.51%
198,054
213,011
EURINR
27-May-2011
63.6900
63.7800
63.3625
63.4650
-0.6700
-1.04%
39,206
144,232
EURINR
28-Jun-2011
64.0000
64.1500
63.6300
63.7125
-0.6900
-1.07%
20,683
24,750
GBPINR
27-May-2011
73.1000
73.3750
73.0050
73.0600
-0.0450
-0.06%
7,088
26,288
GBPINR
28-Jun-2011
73.3000
73.6625
73.3000
73.3400
-0.0775
-0.11%
2,971
4,064
JPYINR
27-May-2011
55.0100
55.7025
55.0100
55.3375
0.1925
0.35%
8,602
34,389
JPYINR
28-Jun-2011
55.3000
55.9100
55.3000
55.5775
0.1950
0.35%
4,481
8,309

Indian equities tracked the biggest drop in Asian stocks in two months after Fitch Ratings lowered Greece’s credit rating and Standard and Poor’s (S&P) said Italy’s rating was at risk. The S&P CNX Nifty on the National Stock Exchange lost 1.8% to 5,386.55. The Sensex closed at 17993.33, down 1.82%.

The Euro dropped tracking decline in equities and commodities which pulled down EURUSD below the 1.40 mark during mid European session. The EURINR May future contract lost 1.04% or 67 paisa on Monday to close at 63,46. However, the GBPINR remained flat with slight downside bias despite decline in GBPUSD, as USDINR rose over half a percent

In Asian currencies, the Yen fell to a low of 55,01The Sensex closed at 17993.33, down 1.82%. v/s the Indian rupee however covered some lost ground taking support from USDINR. The JPYINR May future contract closed the session up 0.355 at 55.3375.

Euro sentiment has been turning bearish now and in the overnight market the EURUSD remained lower. In Asia today it is currently trading above 1.40 mark. A further drop could come as more hedge funds and speculative investors unwind pro-euro bets. These have been cut rapidly, according to CFTC data. Long euro positions fell to $7.4 billion as of May 17, down from $18.4 billion two weeks earlier.

Intraday Outlook

USDINR May contract is likely to find stiff resistance at 45.35 levels and if market fails to break and sustain above the same then we may see correction towards 45.15 and then towards 45.05 levels. For intraday, we see sideways to lower move in USDINR

The EURINR contract may see good support at 63.30 levels and if the level is maintained then pullback is possible. Resistance is seen at 63.65 levels and breach of the same may head recovery towards 63.80 levels.

In case of Pound the May GBPINR contract is likely to take resistance at 73.00 levels and market sustains below the same should stay weak for the session. The support is seen at 72.65 and then 72.50 levels.

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