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Forex markets : Intraday Outlook and Strategy

USDINR Aug: The pair rose to 45.78 on Thursday on sharp selloff in local shares coupled with selling in European currencies.  The market has opened with further gains on Monday today and looking promising to test 46.50 levels in the short term.  Currently the market is trading around 46.05 levels with immediate support at 45.95 levels. The intraday resistance is seen at 46.20 levels. We recommend buying on dips towards the support 45.95 levels.

EURINR Aug:  Despite lower EURUSD the EURINR has opened higher today tracking gains in USDINR which is up by almost 0.7%. The August EURINR is currently trading around 66.20 levels with immediate support at 66.00 and 65.75 levels. The resistance is seen at 66.35 and then 65.50 levels. We recommend buying on dips to 66.00 levels.

GBPINR Aug:  The GBPINR has gained considerably today on gains in USDINR with stable GBPUSD today when compared to India market closing of Thursday. The pair is expected to find resistance at 76.00 levels and sustained trading above the same may push rates higher towards 76.35 levels on intraday. The support is seen at 75.70 levels.

JPYINR Aug:  The pair has tested the 60.00 levels today on gains in USDINR along with weak USDJPY pairs. The market is expected to stay firm for the session as well as for the short term as long as any intervention donot take place. The USDJPY has potential to test 72.00 levels without any intervention by the BoJ. Today we expect the JPYINR Aug pair to trade higher with immediate resistance at 60.25. The support is seen at 59.80 levels. We recommend buying on dips to 59.80 levels with stoploss below 59.60 levels.

Forex trading tips for 11th August.

USDINR Aug: Weak equities may keep rates positive for the session. The DJIA dropped over 500 points yesterday and it will lead to lower opening of local shares. The USDINR is expected to move higher towards 45.50 and then 45.57 levels. The support is seen at 45.30. Any dip towards the 45.30 level is ideal for buying. Watch out to buy around 45.30-45.32 targeting 45.50 with stoploss below 45.20

ERUINR Aug:  The pair has opened lower today after slide of EURUSD overnight, but decline is limited due to gains in USDINR pair. The market is expected to stay sideways to lower for the session. The resistance is seen at 64.65 levels with support at 64.30 and then 64.10 levels. Selling is ideal on a pullback towards 64.60 levels.

Watch out to sell at 64.60-45.65 targeting 64.30 with stoploss above 64.80

GBPINR Aug: The GBPUSD dropped to 1.61 overnight leading to a decline in GBPINR today. The USDINR gains in the morning session lead to a minor gap down opening of the pair. The resistance for August GBPINR contract is seen at 73.55 with support at 73.20 levels.

One can look for buying on declines towards 73.20 levels targeting 73.45 with stoploss below 73.05

JPYINR Aug:  Continuous risk aversion following slide in global shares has been pushing the yen higher. Though the Japanese Government intervened the market to steam Yen rise, the currency is still trading higher on sharp selloff in US stocks from past 4-5 sessions. The JPYINR Aug pair is likely to find resistance at 59.45 levels with support at 58.80 levels.

USD INR Trading strategy

USDINR Aug Buy at 44.70-44.60 targeting 45.35 with stoploss below 44.30
EURINR Aug Sell at 64.60-64.80 targeting 63.80 with stoploss above 65.00
GBPINR Aug Buy at 73.00-73.20 targeting 74.30 with stoploss below 72.50
JPYINR Aug Sell at 58.60-58.80 targeting 57.50 with stoploss above 59.10 ( Correction expected from
higher levels)

Share market Live

US Dow Jones industrial average dropped over 7.8% last week with sharp declines in Thursday where marker
lost over 4% on Intraday.
The US dollar is coming under pressure after the rating cut while the outlook for the US dollar is too bearish
against the rival Euro and GBP. Euro debt problems are much deeper than the US and UK economy is now
turning towards one more double dip recession. Swiss franc is looking a better option compared to other
European currencies with better sovereign rating outlook. The Swiss franc has gained over 30% from past one
year v/s the US dollar.
Few comments after the US rating cut:
Treasury Secretary Timothy Geithner said US Treasury debt is as safe as it was before the S&P downgrade,
urging European leaders to ensure there is an "unequivocal financial backstop" for euro zone governments
facing fiscal and debt problems
Former Federal Reserve Chairman Alan Greenspan said that double-dip recession "depends on Europe, not
the United States”. The United States was actually doing relatively well -- sluggish, but going forward -- until
Italy ran into trouble. "This is not an issue of credit rating. The United States can pay any debt it has because
it can always print money to do that. There's zero probability of default. What I think the S&P (downgrade)
did was to hit a nerve. ... It's hit the self-esteem of the United States, the psyche. And it's having a much
profounder effect than I conceived could happen."
ECB to buy Spanish and Italian Bonds: In a statement issued on Sunday, the ECB Chairman signaled the
readiness to start buying Italian and Spanish bonds in an attempt to contain the sovereign debt crisis. He said
that he will "actively implement" the bond purchase program, the statement also called on all the
government in the euro area to follow through on the steps which were agreed to on July 21. Germany’s
Bundesbank opposes the move, as Buying Italian and Spanish debt may require the ECB to expand its balance
sheet.
Italy is the euro area’s biggest bond market, with 1.8 trillion euros of outstanding debt as of Dec. 31,
compared with 1.1 trillion euros of German debt outstanding on June 30.
On early Monday European trading, the spread on five-year Italian CDS narrowed 71 basis points to trade at
315 basis points. The five-year Spanish CDS spread narrowed 77 basis points to 328.
Despite the ECB purchase, we donot see any major setup for Euro rally. By expanding the balance sheet with
riskier assets the ECB may face serious challenges if economic recovery donot gather pace in the EU area. As
per our view, the austerity measures along with serious challenges from market, EU may face slowdown
further. The EURUSD should slide on the backdrop of fundamental issue in the EU despite US got a rating cut.

US Treasury is still regarded as safe haven in uncertainties there is nothing much left for investors to park
their investments apart from Gold, German Bund, UK Gilt and US treasuries.
Shorting Euro and Holding it looks a better strategy for next 3-4 months perspective.
USDINR outlook Bullish: The US dollar is expected to trade higher v/s the Indian rupee as local stocks get the
beating from global macro events. Any pressure on global liquidity may drive the USDINR higher. We may see
levels such 45.50 and 46.00 in the short term.

Usd Inr

The market has been witnessed sharp volatility from last week following events of Japanese Government
intervention, US rating downgrade by the S&P and ECB plans to buy Spain and Italy bonds.
Japanese Intervention in the FX market: Last week, the market witnessed the second intervention from the
Bank of Japan during the year in an effort to curb the Yen's appreciation. The BoJ intervened in the FOREX
Market in a unilateral move to sell the yen to stem the rally. The government noted that the BoJ would take
prudent action at the time, and the Bank injected 3.5 trillion into the market to stem the yen's gains against
majors mostly USD and Euro.
The BOJ followed Switzerland's intervention that also was due to the surge in exchange rates. Japanese policy
makers increased their efforts to help the economy exit from its worst phase and left the rates unchanged at
the lowest level. The bank also decided for the first time to expand the asset purchases fund, its main policy
tool since March as the Bank wants to introduce more stimuli to push the production cycle to help the
recovery rebound once again.

The USDJPY rose to 80.24 from low of 76.27 after the BoJ intervention and in India JPYINR August dropped
from 57.83 to a low of 55.78. However, yen started recovering on risk aversion from Friday’s US rating cut
and JPYINR has broken the high of 57.83 to trade above 58.00.

US rating downgrade by the S&P: Standard & Poor's played down the Congressional efforts and in a first
move lowered the AAA credit rating after the closure of Friday’s market. The agency lowered the U.S. credit
rating by one notch to AA+ and kept the outlook "negative". They also kept the possibility for another
downgrade if the they spending cuts are less than agreed, there are new fiscal challenges, or interest rates
rise.
The decision to raise the debt limit only in time on August 2 to prevent default, which took the debt ceiling
higher and enforced $2.4 trillion is spending cuts over ten years was not sufficient to S&P which preferred
nearly double the reduction of $4 trillion which cost the U.S. its top credit rating. Moody’s and Fitch already
refrained from the move to downgrade the United States rating after they reached the agreement to raise
the debt ceiling, yet kept the warning in place in the case the spending cuts were not enacted.



The

TREASURY FOREX CARD RATES

Some interesting reads

Next steps on the SEBI story: An interview with U. K. Sinha, by Puja Mehra and Rajiv Bhuva, in Business Today.
 Mobis Philipose in the Mint. Uproar over I-T raids on SEBI members, in Business Today.
In probing SEBI board members, go by CVC rule: Abraham, by Sunny Verma, in theFinancial Express.
Sebi may stick to its guns in MCX-SX case by N. Sundaresha Subramanian in the Business Standard.
Sebi's Abraham emerges front-runner for FMC top job by Ashish Rukhaiyar & Sanjeeb Mukherjee in the Business Standard.
An editorial in the Business Standard.
Sunil Jain on the problem of recruiting a UTI Chairman, in the Financial Express.
SEBI looks to amend law to protect officials from investigative agencies by Reena Zachariah, in the Economic Times.
SEBI seems to have not backed away in the high court on MCX-SX.
Static on the FM channel by Puja Mehra, in Business Today.
That seventies feeling by Pratap Bhanu Mehta, in the Indian Express.
Shubhashis Gangopadhyay in the Business Standard on land acquisition.
We should be learning from these Afghans!


A difficult patch in the Indian IPO market.
Saurabh Kumar in the Mint on the extent to which IPOs from certain investment bankers are more exciting for investors than others.
Demystifying Swiss banking by Priti Patnaik, in the Financial Express.


Imagine there's no central bank.
Steven Levy has a great story of how Google built Plus, in Wired magazine. And, PC World magazine on where and why Google Plus is better.
Sebastian Mallaby in Foreign Affairs on how emerging markets should play the appointment problem of the IMF MD.

Euro and GBP fell overnight, likely to stay weak

The Euro tumbled in Yesterday’s overnight session after the release of U.S. manufacturing data.
U.S. manufacturing expanded in July at the slowest pace in two years, indicating the industry that’s
been driving the economic expansion is starting to weaken.
The Institute for Supply Management’s factory index fell to 50.9 last month from 55.3 in June.
Market forecasted the index to drop till 54.5. This lead risk aversion and brought sell off
commodities and high yielding currencies.
The EURINR settled higher yesterday at 63.80, up 48 paisa and currently in Asia it is quoting at
63.30 levels. Further pressure in the Euro can be expected today on follow through selling pressure.
The cable was also pressurized by weakness in Euro along with weak manufacturing data from the
UK. The GBPINR August contract fell from a high of 72.85 and closed at 72.62, still up by 28 paisa
when compared to Friday’s closing. Today the GBPINR Aug contract is quoting at 72.40 levels at the
opening bell. The UK PMI for manufacturing dropped to 49.1 in July from a prior 51.3. The result
marks it´s worse in just over 2 years.
Pressure in high yielding currencies has pushed the USDINR higher today with the August expiry
future is currently trading up almost 15 paisa. The pair closed down 17 paisa yesterday at 44.2575.
All major Asian currencies declined, led by Malaysia’s ringgit and Singapore’s dollar on concern a
slowing U.S. economy will hurt the global recovery and damp demand for the region’s exports.
The Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, fell
0.1 % to 120.09 as of 10:16 a.m. in Hong Kong. The ringgit dropped 0.3 %to 2.9488 per dollar and
the Singapore dollar slipped 0.1 % to S$1.2016, according to data compiled by Bloomberg.
Today, we expected EURINR and GBPINR to trade weak while USDINR to trade higher.