HSL PCG CURRENCY DAILY

02 February, 2017

PRIVATE CLIENT GROUP [PCG]

 VIEW POINT
STRATEGY FOR THE DAY Rupee to Strengthen on Fiscal Prudence in Budget
The Indian rupee closed 0.57% stronger, the maximum in eight
GBPINR FEB FUT. month, against the US dollar on budget day as Mr. Jaitley targeted a
budget deficit of 3.2% of GDP for fiscal 2018, down from 3.5% this
BUY ARND 85.25 SL 84.95 TGT 85.65 fiscal year. The home currency closed at 67.48--a level last seen on
14 December 2016, up 0.58%, biggest gains since 25 May 2016,
MAJOR CURRENCY from its previous close of 67.87.
India's 10-year bond yield closed at 6.431% compared to its
Prev. Tuesday's close of 6.407%. The bond yield will rise to 6.7% by year-
Close Chg. % Chg. end in line with rising U.S. yields and oil prices.
Close
In absolute terms, the gross fiscal deficit is pegged at 5,465 billion
USDINR 67.475 67.865 -0.390 -0.57%
rupees ($80.9 billion) for fiscal 2018. Of this, just 3,482 billion
DXY INDX 99.590 99.641 -0.051 -0.05% rupees will be financed via net market borrowing (net of buybacks
EURUSD 1.078 1.077 0.001 0.11% and redemptions), which is 770 billion rupees lower relative to 4,252
GBPUSD 1.267 1.266 0.001 0.06% billion rupees budgeted for the current fiscal year. The reduction will
USDJPY 113.020 113.250 -0.230 -0.20% help lower yields on government securities and leave more room for
DG USDINR 67.549 67.664 -0.115 -0.17% the private sector to tap the financial market.
The one month forward USDINR NDF last quoted at 67.61 versus
GLOBAL INDICES yesterdays 67.67 indicating flat to negative start at domestic
bourses. However, the bias for the pair remains bearish with spot
dragging lower to a level of 67.32 while continue to get resistance at
Prev. 68.06, the short term moving average of 20 days.
Close Chg. % Chg.
Close
SGX NIFTY 8705.5 8739.0 -34 -0.38% Dollar Edges Lower As Fed Holds Rates Steady
NIFTY 8716.4 8561.3 155 1.81% The dollar slipped early today, edging back toward recent lows after
SENSEX 28141.6 27656.0 486 1.76% the Federal Reserve after maintain status quo.
HANG-SENG 23239.0 23318.4 -79 -0.34% U.S. central bankers left their benchmark lending rate unchanged on
Wednesday and used their statement to acknowledge that
NIKKEI 19099.9 19148.1 -48 -0.25%
sentiment has gained, and that inflation will rise to their 2% target
SHANGHAI 3159.2 3149.6 10 0.31% even with gradual adjustments in interest rates. They werent
S&P INDEX 2279.6 2278.9 1 0.03% impressed by the fourth-quarter bounce-back in business
DOW JONES 19890.9 19864.1 27 0.14% investment and continued to term it soft.
NASDAQ 5642.7 5614.8 28 0.50% The economic data yesterday reinforced views of economic
FTSE improvement. U.S. factory activity accelerated to more than a two-
7107.7 7099.2 9 0.12%
year high last month.
CAC 4794.6 4748.9 46 0.96%
The dollar index edged slightly lower to 99.59, back toward a more
DAX 11659.5 11535.3 124 1.08% than seven-week low of 99.430 plumbed on Tuesday.

PRIVATE CLIENT GROUP [PCG]

 TECHNICAL OUTLOOK

SPOT USDINR DAILY CHART

Technical Observations

USDINR close below short term moving averages indicating near term weaker trend.
Momentum oscillators RSI given negative divergence suggesting weakness in the pair.
The pair could head lower towards 67.325, the previous bottom, and face resistance at 68.07.
The short term bias turn neutral to bearish with downside support at 67.3250 and 67.23 until it surpass 68.10.

PRIVATE CLIENT GROUP [PCG]

TECHNICAL LEVELS

Contracts Last Pivot S3 S2 S1 R1 R2 R3 View For The Day

USDINR FEB17 67.68 67.74 67.40 67.54 67.61 67.81 67.95 68.02 Short Buildup
EURINR FEB17 73.12 73.16 72.82 72.95 73.03 73.25 73.38 73.46 Long Buildup
GBPINR FEB17 85.51 85.38 84.63 84.84 85.18 85.72 85.93 86.27 Unwinding
JPYINR FEB17 59.78 59.86 59.33 59.53 59.65 59.98 60.18 60.31 Short Buildup

Wkly Wkly 1-Mth. 1-Mth. 52 Wk 52 Wk

Spot 5 DMA 20 DMA 50 DMA 100 DMA 200 DMA
High Low High Low High Low
USDINR 68.23 68.02 68.39 67.48 68.86 66.07 67.88 68.06 68.06 67.46 67.23
EURINR 73.35 72.67 73.35 70.72 77.49 70.42 72.81 72.42 72.07 73.02 74.11
GBPINR 86.27 84.49 86.27 81.78 100.49 80.89 85.19 84.04 84.45 84.17 88.10
JPYINR 60.49 59.10 60.49 57.67 68.11 56.73 59.43 59.38 59.03 61.64 62.86

CURRENCY MOVEMENT
Abs Open Chg. in Chg. in
Currency Open High Low Close Volume
Chg. Interest OI Volume
SPOT USDINR 67.61 67.68 67.48 67.48 -0.39 -- -- -- --
USDINR FEB. FUT. 67.80 67.88 67.67 67.68 -0.39 1272365 148083 1291562 378241
SPOT EURINR 72.94 73.06 72.81 72.86 0.20 -- -- -- --
EURINR FEB. FUT. 73.19 73.29 73.08 73.12 0.20 58196 4358 38115 2986
SPOT GBPINR 85.08 85.33 84.74 85.26 0.88 -- -- -- --
GBPINR FEB. FUT. 85.13 85.59 85.05 85.51 0.81 38261 -3582 73085 -12053
SPOT JPYINR 59.86 59.87 59.52 59.55 -0.04 -- -- -- --
JPYINR FEB. FUT. 60.01 60.06 59.73 59.78 -0.03 22013 1244 25887 -20484

PRIVATE CLIENT GROUP [PCG]

 ECONOMIC EVENTS RELEASED
Date Time Country Event Period Survey Actual Prior

02/01/2017 10:30 IN Nikkei India PMI Mfg. Jan -- 50.4 49.6

02/01/2017 14:30 EC Markit Eurozone Manufacturing PMI Jan F 55.1 55.2 55.1
02/01/2017 15:00 UK Markit UK PMI Manufacturing SA Jan 55.9 55.9 56.1
02/01/2017 17:30 US MBA Mortgage Applications 27-Jan -- -3.20% 4.00%
02/01/2017 18:45 US ADP Employment Change Jan 167k 246k 153k
02/01/2017 20:15 US Markit US Manufacturing PMI Jan F 55.1 55.0 55.1
02/01/2017 20:30 US ISM Manufacturing Jan 55 56.0 54.7
02/02/2017 00:30 US Fed Rate Feb 1 0.75% 0.75% 0.75%

ECONOMIC EVENTS TODAY

Date Time Country Event Period Survey Prior

02/02/2017 15:00 UK Markit/CIPS UK Construction PMI Jan 53.8 54.2

02/02/2017 17:30 UK Bank of England Bank Rate 2-Feb 0.25% 0.25%
02/02/2017 17:30 UK BOE Asset Purchase Target Feb 435b 435b
02/02/2017 17:30 UK BOE Corporate Bond Target Feb 10b 10b
02/02/2017 19:00 US Nonfarm Productivity 4Q P 0.90% 3.10%
02/02/2017 19:00 US Initial Jobless Claims 28-Jan 250k 259k
02/02/2017 19:00 US Continuing Claims 21-Jan -- 2100k

PRIVATE CLIENT GROUP [PCG]

 Technical Analyst: Vinay Rajani (vinay.rajani@hdfcsec.com)
Currency Analyst: Dilip Parmar(dilip.parmar@hdfcsec.com)

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042
HDFC securities Limited, 4th Floor, Astral Tower, Above HDFC Bank Ltd, Nr.Mithakhali Six Roads, Navrangpura, Ahmedabad 380009.
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Disclosure:

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PRIVATE CLIENT GROUP [PCG]