Insignia Consultants
New Delhi
Monday, September 10, 2018
FOREX SPOT WEEKLY TECHNICAL REPORT
(inter-bank prices below)
Everyone is cheering US August nonfarm
payrolls. I am not. June and July numbers were revised lower below growth
levels. To me the threshold is 160,000 NFP jobs. Wage rate growth is peanuts
and will not cover trade tariff induced inflation over the coming months. In
the short term US dollar will gain due to a safe haven. Long term weakness will
be there. But is difficult to predict when the US dollar Index will crash.
Trump wants to impose more and more
trade tariff on China on some pretext or the other. These tariff will be
inflationary in USA. I expect Federal Reserve to raise interest rates every
quarter for the next one year.
Consumer Price Index, Producer Price
Index, Retail sales and beige book are the key US economic data release to look
out this week. A sharp rise in CPI and PPI (If any) will result in sharp gains
for the US dollar and vice-versa.
European central bank meeting and bank
of England meeting on 13th/Thursday will also be looked for comments
on economy and interest rate trend.
It remains to be seen how world markets
react to Trump’s more and more China tariff. Nervous are the investor and
cautious are analyst like me. Less than two months for the US senate election.
The heat of US senate elections will rise for the world markets with passing of
each week. I just hope Trump does not melt the world market before the US
senate elections. Any further escalation of trade tariff and its crisis can
cause a global recession. So far emerging market currencies and stock markets
are able to withstand everything. All policies of emerging market central banks
will be useless if the crisis continues to escalates till early November.
India at a glance
Current account deficit (CAD) widened to
2.40% of GDP. India’s CAD will only rise over the coming months. Higher crude
oil bill, lack of measure to curb expenditure by the government in a
pre-election year, a weaker rupee and upcoming festive season on October and
November are all negative for the CAD.
Momentum is bullish. Technically rupee
is over brought against the major currencies. Correction can happen anytime but
so far is not happening. Importers and corporates for foreign currency loans
will be forced to cover their payables if the rupee does not fall against the
US dollar this week. All those who have unhedged foreign exposure in India will
fall in a pit IF the rupee weakens this week. Everyone is expecting the rupee
to fall against the US dollar after the release of US nonfarm payrolls.
The weakness in the rupee is due to sell
off in emerging markets. A big key for the rupee and emerging market
currencies.
US dollar-Indian Rupee (usd/inr)
Current Market Price: 72.1450
· Only a break of 72.4525
will trigger a rise to 72.8400 and 73.2225.
· Rupee needs a daily
close below 71.7575 for three consecutive days to be in a bearish zone and fall
to 70.6350 and 70.1975.
· There will be very
sharp two way moves.
· Technically over
brought. Momentum is bullish.
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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.
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