Currency Daily Report December 11

Currencies Daily Report Tuesday| December 11, 2012

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Content

Overview

US Dollar

Euro

GBP

JPY

Economic Indicators

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Fundamental Team

Nalini Rao - Sr. Research Analyst

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Anish Vyas - Research Analyst

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Overview:

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Highlights

French Industrial Production declined to -0.7 percent in October.

Italian Industrial Production in October declined -1.1 in October.

EU Sentix Investor Confidence grew at -16.8 levels in December.

Asian markets are trading on a mixed note taking cues from US Federal

Reserve policy meeting scheduled on December 11- 12 , 2012 and

persistent worries of the fiscal cliff in US.

US Dollar Index

US Dollar Index (DX) swung between gains and losses and settled 0.1

percent lower on Monday. The index remained strong in most part of

the day owing to political uncertainty caused after Italian Prime

Minister planned to resign after 2013 budget approval. However, risk

appetite of the market participants witnessed a rise on optimism that

US Federal Reserve in its policy meeting scheduled on December 11-12

might announce stimulus package to boost the economy. This erased

the early gains in the Index and it settled lower.

US equities ended on a positive note on Monday. Equities gained

taking cues from favorable economic data from the nation as well as

China. The index touched an intra-day low of 79.98 and closed at 80.30

on Monday.

Dollar/INR

The Indian Rupee traded on a flat note in yesterday’s trading session.

The currency remained appreciated majority during the day on account

of upbeat Asian markets sentiments along with approval of the FDI in

both the houses of the parliament.

However, in the last hour of the trade currency depreciated due to

resignation of Italian Prime Minister Mario Monti which created

worries over the country’s debt issues. Additionally, a stronger DX

along with dollar demand from the importers also acted as a negative

factor for the currency. It touched an intra-day low of 54.56 and closed

at 54.34 Monday.

For the current month FII inflows totaled at Rs. 6,745.30 crores till 10th

December 2012. While year to date basis, net capital inflows stood at

Rs. 1,10,017.30 crores till 10th

December 2012.

Outlook

From the intra-day perspective, we expect Indian Rupee to depreciate

on the back of mixed movement in the Asian markets. Further,

strength in the DX along with dollar demand is expected to add to the

depreciation in the currency.

Market Highlights (% change) as on December 07, 2012

LastPrev.

dayWoW MoM YoY

NIFTY 5908.9 0.0 0.6 3.9 21.4

SENSEX 19409.7 -0.1 0.5 3.9 19.7

DJIA 13169.88 0.1 1.6 2.8 8.1

S&P 1418.6 0.0 0.6 2.8 13.0

FTSE 15354.0 -2.2 -3.3 1.1 -0.8

KOSPI 1957.4 0.0 0.9 2.8 4.4

BOVESPA 59248.2 5.3 1.8 3.3 1.7

NIKKEI 9533.8 0.1 -0.1 8.9 11.7

Nymex Crude

(Jan’13) - $/bbl

85.93 -0.4 -3.5 -0.2 -13.6

Comex Gold (Dec’12)

- $/oz

1712.70 0.5 -0.4 -1.0 0.0

Comex

Silver(Dec’12) $/oz

3324.50 0.6 -1.3 2.0 3.3

LME Copper (3

month) -$/tonne

8134.00 1.2 1.5 7.4 3.8

CRB Index

(Industrial)

G-Sec -10 yr @7.8% -

Yield

99.85 -0.1 0.0 0.3 -1.8

Source: Reuters

US Dollar (% change) as on December 07, 2012

LastPrev.

dayWoW MoM YoY

Dollar Index 80.30 -0.1 0.5 -1.0 2.1

US $ / INR (Spot) 54.34 0.0 0.8 0.4 -4.5

US $ / INR Dec’12

Futures (NSE)

54.69 -0.03 -0.39 -0.26 4.67

US $ / INR Dec’12

Futures (MCX-SX)

54.69 -0.04 -0.40 -0.27 4.68

Source: Reuters

Technical Chart – USD/INR

Source: Telequote

Technical Outlook valid for December 06, 2012

Trend Support Resistance

US Dollar/INR Dec’12

(NSE/MCX-SX)Sideways 54.51/54.35 54.80/54.95



Euro (% change) as on December 07, 2012

Last Prev. day WoW MoM YoY

Euro /$ (Spot) 1.294 0.1 -0.9 1.8 -3.2

Euro / INR (Spot) 70.32 1.0 1.4 -1.2 #N/A

Euro / INR Dec ’12

Futures (NSE)

70.59 -0.10 -1.27 1.24 0.75

Euro / INR Dec’12

Futures (MCX-SX)

70.6 -0.08 -1.26 1.26 0.76

Source: Reuters

Technical Chart – Euro

Source: Telequote

GBP (% change) as on December 07, 2012

Last Prev. day WoW MoM YoY

$ / GBP (Spot) 1.6074 0.2 -0.1 1.1 2.7

GBP / INR (Spot) 87.335 0.24 -0.68 0.65 7.52

GBP / INR Dec’12

Futures

(NSE)

87.74 0.12 -0.41 0.37 7.04

GBP / INR Dec

’12 Futures

(MCX-SX)

87.72 0.08 -0.45 0.33 7.00

Source: Reuters

Euro/INR

Euro gained 0.1 percent in yesterday’s session. The currency gained due

to weakness in the DX. However, Euro remained lower in most part of

the trading session on account of political uncertainty created after

Italian Prime Minister planned to resign after the 2013 budget is

approved. With the resignation of the Prime Minister the earlier efforts

taken to curtail the sovereign debt crisis might be disrupted. This

created bearish market sentiments and strengthened DX. Weakness in

the DX towards the end caused the currency to appreciate. The currency

touched an intra-day high of 1.2946 and closed at 1.294 on Monday.

German Trade Balance was at a surplus of 15.2 billion Euros in October

as against a previous surplus of 16.9 billion Euros a month ago. French

Industrial Production declined by 0.7 percent in October from previous

decline of 2.7 percent in prior month. Italian Industrial Production

declined by 1.1 percent in October as compared to decline of 1.3

percent in earlier month. European Sentix Investor Confidence was at -

16.8-mark in December with respect to fall of 18.8-level in November.

Outlook

In today’s session we expect Euro to depreciate on the back of weak

global market sentiments along with strength in the DX. However,

favorable economic data from the nation might cap sharp depreciation

in the currency today. Further, worries of political uncertainty are likely

to be erased after Italian Prime Minister said that his resignation would

not create vacuum in decision making. Elections would produce

responsible government. This is expected to cushion depreciation in the

currency.



Euro/INR Dec’12


GBP/INR

The Pound appreciated by 0.2 percent in yesterday’s session on account

of upbeat global market sentiments. Additionally, weakness in the DX

also supported an upside in the currency. It touched an intra-day high of

1.6096 and closed at 1.6074 on Monday.

Outlook

In today’s session, we expect Pound to depreciate on the back of weak

global market sentiments along with strength in the DX. Additionally,

unfavorable data from the nation is expected to add to the depreciation

in the currency.



GBP/INR Dec ’12




JPY (% change) as on December 07, 2012

Last Prev day WoW MoM YoY

JPY / $ (Spot) 82.33 -0.2 0.1 3.6 6.2

JPY / INR (Spot) 0.6595 0.11 -0.77 -3.95 -1.38

JPY 100 / INR Nov’12

Futures (NSE)

66.53 0.23 -3.81 -3.81 -1.05

JPY 100 / INR Nov’12

Futures (MCX-SX)

66.53 0.21 -0.43 -3.81 -1.00

Source: Reuters

Technical Chart – JPY

Source: Telequote

JPY/INR

The Japanese Yen appreciated by 0.2 percent yesterday on the back of

rise in risk aversion in the global market sentiments in the early part of

the trade which led to increase in demand for the low yielding currency.

However, sharp upside in the currency was capped as a result of

unfavorable economic data from the country. The currency touched an

intra-day high of 82.09 and closed at 82.33 on Monday.

Japan’s Consumer Confidence declined by 0.3 points to 39.4 -mark in

November when compared to rise of 39.7-level in October. Economy

Watchers Sentiment rose by 1 point to 40-level in November from

previous rise of 39-mark in October. Prelim Machine Tool Orders declined

by 20.7 percent in November as compared to previous decline of 6.7

percent in October.

Outlook

In the intra-day session, we expect to yen to appreciate on the back of

rise in risk aversion in the global markets which will increase the demand

for the low yielding currency.



JPY/INR Dec ’12


Economic Indicators to be released on December 11, 2012

Indicator Country Time (IST) Actual Forecast Previous Impact

RICS House Price Balance UK 5:31am -9% -5% -7% Medium

New Loans China 11th

– 14th

- 550B 505B Medium

German ZEW Economic Sentiment Euro 3:30pm - -11.4 -15.7 High

ZEW Economic Sentiment Euro 3:30pm - 0.1 -2.6 Medium

Trade Balance US 7:00pm - -42.4B -41.5B High

Currency Daily Report December 11

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