Weekly Currency Report for Exporters and Importers :14th August 2018

DAILY FOREX REPORT FOR EXPORTERS AND IMPORTERS

(inter-bank prices below)

US dollar will gain further, if Turkey spat escalates further. No news from Turkey can result in US dollar Index falling below 96.00 and sell off. US dollar is overbrought. There can be a sharp correction in the greenback anytime. Economic data releases from Europe and USA starts from today. Slowdown indicators will be watched. I expect August to the slowest growth month of this year. Global growth rates should start rising from September but at a snails pace. The US dollar could be nearing a medium term top. But is difficult to predict when and where the top will be formed.

India

India’s July inflation rose to 4.17%. Interest rate hike will now be off the radar of RBI, unless rupee sinks in the short term. If the RBI does not rate interest rates by October then political factors will prevent an interest rate hike for the rest of the year. A certain news channel says that the ruling BJP will loose in all the three states of Rajasthan, Madhya Pradesh and Chhattisgarh in the state elections between November and December. My personal view is that the BJP has lost Rajasthan months before the elections are held. Madhya Pradesh and Chhattisgarh should be a close call. If BJP looses in all the three states, then rupee will weaken overall against the US dollar as more populist measures will be there before the central elections. Global factors will dictate the rupee more than domestic factors. Exporters are selling far forwards on rise. Importers/demand will vanish if rupee falls today. Tomorrow is a holiday. Traders will take positions for Thursday.

US dollar-Indian Rupee (usd/inr CMP 69.7225):

One Support: 69.6575
One Resistance: 69.9650

o      Rupee can fall to 69.3175 and 69.1750 before close as long as it does not break 69.9650.

o      Only a break of 69.6950 will trigger a rise.

US dollar/Japanese Yen (usd/jpy CMP 110.83):
One Support: 110.32
One Resistance: 110.96

o      There is a technical congestion between 110.08-110.27-110.59 zone.

o      Trend is down.

o      Yen can fall to 110.27 and 110.08 as long as it trades below 111.32.

o      Yen needs to trade over 111.32 to be in intraday bullish zone.

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FAQ

Why Do I ask exporters and importers to use trailing stop loss? Some day’s currency markets are very volatile. Trend (short term as well as medium term) change at the flick of coin without any advance warning. In order to make the most of the volatility it is preferable to use trailing stop loss using technical analysis as basis. Those exporters and importers do not wish to take the risk, should take a forward cover or hedge in future and options market if export or import price near cost.

Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, crypto currency, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared by Chintan Karnani

NOTES TO THE ABOVE REPORT

PLEASE NOTE: HOLDS MEANS HOLDS ON DAILY CLOSING BASIS

ALL PRICES ARE IN INDIAN RUPEE UNLESS OTHERWISE SPECIFIED

Indian Standard Time (IST): +5:30 GMT

Current Market Price (CMP)

All foreign exchange prices are for inter-bank rates.