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INDICES % CHANGE
NASDAQ 2.08
DOW JONES 1.32
NIKKEI -0.02
HANGSENG 0.29
CAC -0.11
DAX 0.02
FTSE 1.03
Currencies % CHANGE
DXY -0.18
EURUSD -0.18
GBPUSD -1.44
USDJPY 0.03
MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY 1 Month 3 Month 6 Month 9 Month 12 Month
USDINR 64.5632 64.7751 64.8586 64.5088 64.5945 Monday 64.6075 65.1325 65.8925 66.6525 67.3850EURINR 72.2333 72.7489 72.4730 72.4692 72.3329 Tuesday 64.9375 65.4675 66.2200 66.9800 67.7150GBPINR 83.9515 84.0327 84.0957 83.7711 83.1848 Wednesday 64.7700 65.3000 66.0450 66.7950 67.5250JPYINR 57.9800 58.3700 57.9600 57.7400 57.9500 Thursday 64.6325 65.1475 65.8975 66.6600 67.3600
Friday 64.4525 64.9675 65.7225 66.4675 67.1900
Currencies Weekly Report
www.karvycurrency.com Monday 29 May 2017
Global Economic Review & Outlook
Major oil producers agreed to extend output cuts for an additional nine months at an OPEC meeting in Vienna. The production cuts of 1.8 million barrels a day, first agreed on in November last year, will now extend to
March 2018. The OPEC-led output cuts are targeted at rebalancing the global overhang in the oil markets which saw oil prices fall by more than half in recent years. Oil prices fell by almost 5 percent in the last session
following the news as some investors had been hoping for deeper production cuts. US crude had traded above the USD 50 mark for most of the week in anticipation of the OPEC meeting.
Political developments in the US could also potentially rattle markets continuing the political turmoil in Washington also kept investors cautious as U.S. President Donald Trump, returned to the White House after a nine-
day trip to the Middle East and Europe. It was reported by NBC that Jared Kushner, the son-in-law and senior adviser of US President Donald Trump, was now under FBI scrutiny in its Russia probe.
Last Price Previous Week
12604.25 12602.18
North Korea fired what appeared to be a short-range ballistic missile which landed in the sea off its east
coast, South Korea's military said, the latest in a series of missile tests defying world pressure and
threats of more sanctions. While the situation remains tense, the market has gotten used to missile
launches, with broader volatility also declining, The latest weekend polls showed British Prime Minister
Theresa May's lead over the opposition Labour Party has narrowed sharply since last week's terror
attack in Manchester, suggesting she might not win the landslide predicted just a month ago. Four
opinion polls published on Saturday showed that May's lead had contracted by a range of 2 to 6
percentage points, indicating the election could be much tighter than initially thought when she called
the snap vote.
The PBOC has fine-tuned the pricing mode in the last couple of years by taking reference to the yuan-
dollar closing price and the yuan’s value against a basket of currencies. Beijing says yuan policy is
actually doing US a favour But the China Foreign Exchange Trade System said the mainland’s foreign
exchange market was susceptible to “irrational expectations” that could exaggerate one-sided
sentiment. A “counter-cyclical” factor in the pricing model could help offset the “herd effect” and bring
the yuan’s central parity in line with economic fundamentals, it said.
7547.63 7470.71
25701.63 25628.00
5330.80 5336.64
6210.19
RBI Reference Rate USDINR Forward Rates (Month End)
1.2847 1.3035
111.31 111.28
6083.7
21080.28 20804.84
19682.57 19686.84
Last Price Previous Week
97.26 97.44
1.1187 1.1207
S1 Pivot R1
The DXY Daily charts suggest that the Index continues to trade under
pressure well below the 50% Fibonacci retracement levels. We have seen
the index rise from 96.80 levels last week to test 97.50 and as the pair
trades near the 8-13-20 D EMA's there are chances it might bounce a little
97.90 % 98.20 levels. Sustenance at these levels, which is a rare scenario,
might help the index rise upto 98.60-98.80 levels this week.
The index though is more likely to continue trading weak, well below the
dense bearish Ichimoku cloud; dropping further down to 96.80 and 96.40
further.
US dollar index closed for the week at 97.36 compared to previous week’s close of 96.97. Trading range for the week was in between 99.14-96.97. This week US dollar against the major basket has taken a rollercoaster
ride with the investors remaining cautious about U.S. political uncertainty about Trump’s election campaigns, where he was suspected to have links with Russia. Due to which market participants sold off US dollar
expecting that the turmoil in Washington could delay President Trump's efforts to implement economic stimulus plans. FOMC meeting minutes from May 2-3 meeting has showed that most Fed officials saw tightening
likely to be appropriate as soon as consumer spending rebounds, a few policymakers were worried that progress on inflation has slowed. They also said their balance-sheet plan would raise roll-off caps every 3 months as
part of their process to unwind stimulus. But US dollar has witnessed selling across the board as the investors as investors are concerned about inflation view of the Fed officials. U.S. Q1 GDP was revised higher to a 1.2%
growth rate versus the 0.7% pace in the Advance report. That's much better than expected, with most components bumped up. Consumption was nudged up to 0.6% from 0.3%. The 10.4% jump in business spending was
revised to 11.9%, with residential spending at 13.8% from 13.7%, and non-residential spending at 11.4% from 9.4%. Government consumption was revised to -1.1% from -1.7%. Inventories subtracted $45.3 bln versus -
$39.3 bln.
Going forward US is shut on Monday 29th May for Memorial Day and there no major reports to be publish. Tuesday 30th May’s calendar is packed with Personal spending figures for the month of April along with Core
PCE Price Index numbers and CB Consumer Confidence, we also have FOMC Member Brainard scheduled to speak later in the day. Pending home sales data for the month of April, Chicago PMI for May, a speech from
FOMC Member Kaplan and Williams along with Beige Book report are due for Wednesday 31st May. On Thursday 1st June we have ADP Nonfarm Employment Change, Initial Jobless Claims, Nonfarm Productivity,
Manufacturing PMI, ISM Manufacturing Employment and PMI number for the month May due to be reported. Friday 2nd June, we have Average Hourly Earnings, Nonfarm Payrolls and Private Nonfarm Payrolls for the
month of May, US Trade Balance, Unemployment Rate and a speech from FOMC Member Harker scheduled.
SELL DXY 97.80-97.90 SL 98.20 TGT 97.10-96.00
Dollar Index Outlook
S2
96.51 98.01
Bearish 96.40-97.90
Pivot Levels
Weekly Bias Weekly Trading Strategy (SPOT)
96.98 97.26
S3
95.76
R3
98.76
R2
Weekly Range (SPOT)
97.73
S1 Pivot R1
Weekly Range (SPOT)
Bearish
Exporters Strategy May Exports hedged at 64.70 (Stop Levels)
Pivot Levels
(Futures) 64.50 64.87
S3 S2 R2
64.20-64.90
Weekly Bias Weekly Trading Strategy (SPOT)
Rupee Outlook
Indian Rupee against US dollar has closed for the week at64.44 compared to previous week’s close of 64.64. Trading range for the week was 64.95-64.42. There was no major economic data
reported from Indian context in the previous week. Most of the movement happen in the pair was technical. As well as few other global factors have shaped the previous week’s move. A couple of
geopolitical incidents in Asia raised some eyebrows but not risk aversion after recent volatility subsided. Looking forward we have India’s Q4 GDP numbers to be reported on Wednesday 31st May
where the expectations are set 7.1%. Along with day markets would also focus on RBI policy on 7th June and FOMC meeting on 14th June. Coming to eco reports US NFP data is due to be reported
later this week. As well as any update on Whitehouse turoil would add some further volatility.
This is the daily chart of USDINR spot, during the last week the pair has
been trading in the range of 64.42 on the downside and 64.94 on the
upside, and could not able to close above the resistance of 65 levels, the
pair made a bottom near 64 levels and bounce till 65 levels and not able to
close above that signifies bears are aggressive at the said levels expect the
same trend to continue during the week, so trader can utilize uptick to sell
the pair.
SELL USDINR SPOT 64.60-64.85 SL 65.05 TGT 64 .20
Importers Strategy May imports partially hedged at 64.85/90 and 64.20/25
65.07
R3
63.72 64.30 65.45 66.03
S1 Pivot R1
This is the daily chart of EURUSD pair, during the week the pair traded in a
broader range of 1.1198 on the down side and higher side 1.1268and had
a shooting star type of candle signifying a short term reversal after a
strong run up, the pair broke out of 1.08 levels with a runaway gap and
since then had a trending session on the upside, the pair had a inverted
head and shoulder pattern and had strong momentum and now that
momentum is over and the pair can consolidate with 21 dma at 1.1050
likely to act as a support so utilize dips to buy the pair.
EURO closed for the week at 1.1183 compared to the previous week’s close of 1.1207. Trading range for the week was 1.1268-1.1158. The euro had hit more than 6-month’s high against US dollar after German Chancellor
Angela Merkel said it was "too weak" because of the European Central Bank's ultra-low interest rates and money printing program. And Bundes Bank’s President Weidmann who spoke in the previous week stressed on
central bank's policy which doesn't hinge on political events, but price pressures. He admitted that at the current moment nobody doubts that an expansionary policy is appropriate, but added that there are different
opinions on the necessary degree of expansion and the instruments used. In what sounded like a thinly veiled comments on reports that Merkel and Schaeuble want to see him as Draghi's successor Weidmann stressed
that the central bank head should be selected on merit, not on nationality. ECB's Draghi in the previous weeks said that “No reason to deviate from policy guidance, stressing that QE could have more negative
consequences than negative interest rates”. He also admitted that the macroeconomic climate is improving and the Eurozone is witnessing an increasingly solid recovery, but he also said “underlying inflation pressures
remain subdued”. Apart from the Service PMI data’s most of the economical report exceeded the expectations.
Looking ahead we have, ECB’s President Draghi scheduled to speak on Monday 29th May. Tuesday 30th May, we have ECB's Liikanen and Nowotny scheduled to speak along with German CPI numbers to be reported.
German Retail Sales, German Unemployment Change and rate, Eurozone Core CPI numbers and Unemployment rate along with a speech from ECB's Coeure and Lautenschiaeger scheduled for Wednesday 31st May.
Thursday 1st June’s calendar is packed with Eurozone’s and German Manufacturing PMI figures and a speech from ECB’s Lautenschiaeger.
Weekly Bias Weekly Trading Strategy (SPOT) Weekly Range (SPOT)
Importers Strategy May imports partially booked at 69.10 levels. Remaining stopped at/above 70.50
73.20
Exporters Strategy May exports hedged at 70.40
Pivot Levels
(Futures) 72.31 72.88
S3 S2 R2 R3
71.11 71.99 73.76 74.65
Bullish BUY EURUSD 1.1130-1.1100 SL 1.1080 TGT 1.1250 BUY EURINR FUT 72.30-72.00 TGT 72.90 SL 71.80 71.60- 72.60
Importers Strategy May imports partially hedged at 64.85/90 and 64.20/25
Euro Outlook
S1 Pivot R1
This is the daily chart of GBPUSD pair, during the week the pair traded in
the range of 1.3043-1.2772 and had a bearish candle during the week.
After a previous week consolidation, the pair broke out of the pennant
pattern above 1.2840 and trended on the upside during few weeks back,
the pair tested the levels of 1.3050and could not sustain above that now
1.27 is a strong support zone while resistance comes at 1.30 levels so
likely to trade within the specified range.
Pound closed for the week at 1.2804 compared to the previous week’s close of 1.3035. Trading range for the week was 1.3043-1.2772. Most of the moment is happed due to the raising UK political concerns as an opinion
poll showing that the Labour Party narrowed the gap on the ruling Conservative Party ahead of upcoming elections, adding to political risks surrounding Brexit. Investors had been confident that Prime Minister Theresa
May would secure a strong win in the election, strengthening her hand in Brexit negotiations and allowing her to ignore lawmakers pushing for a hard Brexit but the tough negotiations with the E.U. last week started with
talk that the UK could walk away from Brexit negotiations if it is forced to pay its massive exit bill of as much as $100 Billion. At the same time, the EU refuses to back down from its hard negotiating stance, making the
path forward difficult to see. Coming to economical data UK’s Q1 GDP numbers were reported in the previous week and it was trimmed to 0.2% quarter on quarter and the latest CBI retails sector survey for May showing
"tepid trading conditions" in the key sector in the face of eroding inflation-adjusted average household income. Coming into today, Coming to this week, UK is shut on Monday 29th May for Bank holiday. On Thursday 1st
of June we have Nationwide HPI and Manufacturing PMI figures for the month of May due to be reported. And 2nd of June we have Construction PMI figures scheduled to be reported. Though we have major data
scheduled to be reported this week the focus to remain on UK political news as getting close to snap elections on 8th of June. And any news about UK-EU negotiation on Brexit would add further volatility. In near term
GBP/USD pair to remain under pressure and expect the pair to head towards 1.2550 levels.
Weekly Bias Weekly Trading Strategy (SPOT) Weekly Range (SPOT)
Importers Strategy May imports partially hedged at 81.50-81.60 levels. Remaining booked at 82.82 (RBI Ref.on 29.05.2017)
Exporters Strategy May exports partially booked at 83.35 levels. Remaining stopped at 83.20
Pivot Levels
(Futures) 82.72 83.73
S3 S2 R2 R4
80.66 82.19 85.27 86.81
Bearish Sell GBPUSD 1.2860-1.2890 TGT 1.2770 SL 1.2930 SELL GBPINR FUT 83.35-83.50 TGT 82.80 SL 83.74 82.20 -83.40
Importers Strategy May imports partially booked at 69.10 levels. Remaining stopped at/above 70.50
British Pound Outlook
84.26
S1 Pivot R1
Weekly Range (SPOT)
Importers Strategy May imports partially booked at 59.70 and 57.90.
58.73
Exporters Strategy May exports partially booked at 59.50 and 57.90
Pivot Levels
(Futures) 58.00 58.35
S3 S2 R2 R4
56.89 57.62 59.08 59.81
Sideways-Bearish BUY USDJPY 110.80-111.00 TGT 112.50 SL 110 SELL 58.40-58.60 TGT 57.70 SL 58.87 57.50-58.50
Weekly Bias Weekly Trading Strategy (SPOT)
Importers Strategy May imports partially hedged at 81.50-81.60 levels. Remaining booked at 82.82 (RBI Ref.on 29.05.2017)
Japanese Yen Outlook
Japanese Yen closed for the week at 111.34 compared to the previous week’s close of 111.28. Trading range for the week was 112.14-110.84. Japanese Trade Balance fell short of expectations at 482 billion Yen against the
forecasted 521 billion Yen. The YoY data for exports also fell below the previous levels of 12%, now at 7.5%. NIKKEI 225 is also trading on the higher side, up by 0.33% or 66.74points. Weaker economic data in regard to
Yen and the strengthening of the Dollar in the market is pushing toward depreciative Yen. A couple of geopolitical incidents in Asia overnight raised some eyebrows but not risk aversion per se after recent volatility
subsided. FOMC meeting minutes from May 2-3 meeting has showed that most Fed officials saw tightening likely to be appropriate as soon as consumer spending rebounds, a few policymakers were worried that progress
on inflation has slowed. This resulted in US dollar sell-off across the board as investors were concerned about inflation view of the Fed officials.
Looking ahead, this week Japanese Household Spending figures are scheduled to be published for the month of April where the expectations are set at 1.1%, along with that we also have Jobs/applications ratio and Retail
Sales to be reported on Tuesday 30th May. Industrial Production for the month of April are scheduled to be published on 31st May 2017. And on Thursday 1st June we have Q1 Capital Spending year-on-year due to be
reported.
This is the dally chart of USDJPY pair, the pair was trading a range of
112.15 and 110.80 on the downside the pair had a doji kind of a candle on
a weekly time frame near the supports of 111 levels near the 200DMA,
after falling from 114.37 levels in the previous week, strong supports
comes at 108 on the downside while strong resistance comes at 114 levels
and pair is likely to trade with the range for the coming months with some
positive bias so traders can utilize dips to buy the pair.
Date Time Currency Forecast Previous
29.05.2017 1:30pm EUR 5.20% 5.30%
6:30pm EUR
30.05.2017 All Day EUR -0.10% 0.00%
12:30pm EUR 2.10% 2.60%
6:00pm USD 0.10% -0.10%
USD 0.40% 0.00%
7:30pm USD 120.1 120.3
31.05.2017 11:30am EUR 0.40% 0.10%
2:00pm GBP 4.5B 4.7B
2:30pm EUR 1.50% 1.90%
EUR 1.00% 1.20%
5:30pm USD
7:15pm USD 57 58.3
7:30pm USD 0.70% -0.80%
01.06.2017 12:45pm EUR 54.9 54.5
2:00pm GBP 56.5 57.3
5:45pm USD 181K 177K
6:00pm USD 239K 234K
USD -0.60% -0.60%
7:30pm USD 54.7 54.8
8:30pm USD -4.4M
02.06.2017 12:30pm EUR -110.2K -129.3K
2:00pm GBP 52.7 53.1
6:00pm USD 0.20% 0.30%
USD 186K 211K
USD 4.40% 4.40%
USD -45.5B -43.7B
Spanish Flash CPI y/y
Construction PMI
Crude Oil Inventories
ECB President Draghi Speaks
German Prelim CPI m/m
M3 Money Supply y/y
Core PCE Price Index m/m
Personal Spending m/m
CB Consumer Confidence
German Retail Sales m/m
Net Lending to Individuals m/m
CPI Flash Estimate y/y
Core CPI Flash Estimate y/y
FOMC Member Kaplan Speaks
Chicago PMI
Spanish Unemployment Change
Unemployment Claims
Revised Nonfarm Productivity q/q
ISM Manufacturing PMI
Spanish Manufacturing PMI
Manufacturing PMI
ADP Non-Farm Employment Change
Average Hourly Earnings m/m
Pending Home Sales m/m
Trade Balance
Importers Strategy May imports partially booked at 59.70 and 57.90.
Economic Data for the Week
Data
Non-Farm Employment Change
Unemployment Rate
Disclaimer:
The information and views presented in this report are prepared by Karvy Stock Broking Limited. The information contained herein is based on our analysis and up on sources that we consider reliable. We, however, do
not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report
may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary.
While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor any person connected with any associated companies of Karvy accepts any liability arising from the
use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned companies from time to time.
Every employee of Karvy and its associated companies are required to disclose their individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment
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restricted to place orders only through Karvy Stock Broking Ltd.
Deepak Agarwal [email protected]
Shashank Damaraju
Report prepared by: Siddhesh Ghare [email protected]
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