Date: 08th March, 2016
Dear Readers,
Indian rupee opened at 67.21 after closing the previous session at 67.08 levels. The intra-day range is seen between 67.15-67.45 levels.
China trade balance slows in February
Despite the measures being taken by the PBoC China's trade balance continues to disappoint. Today's trade balance number showed that China's exports fell 25%, almost double to the expectation of drop of 14.5%. Trade balance showed surplus was down to $32.6 billion compared to 63.3 billion in the previous month. Most Asian indices were trading in the green before the release of the data but came under pressure after the weak set of numbers.
Dollar falls despite robust non-farm payrolls number
On Friday, US non-farm payrolls number for February showed that the economy added 242,000 jobs in February compared to job addition of 195,000 jobs in the previous month. What was disappointing is that the growth in average hourly earnings showed contraction compared to growth of 0.2% in the previous month. The dollar against its major crosses fell after the release of the data but the equities in the U.S. rose on speculation that better-than-expected number could raise prospects of a rate hike in the next meeting.
Crude prices fall in Asia but Brent stays above $40
Oil prices dipped in Asia but Brent crude stayed above USD 40 a barrel, as traders took profits after solid gains over the past three weeks. Prices have strengthened following talks of a production freeze, with a producers meeting mooted on March 20 in a bid to ease a global supply glut that has depressed the market. Sentiment has also been boosted by strong US jobs growth data and a weaker greenback which makes dollar-priced oil cheaper, perking up demand.
Indian 10 Year Bond Yield
Indian government bonds rose, as the central bank surprised markets by announcing late Friday an open market purchase of bonds this week. The OMO purchase is a sentiment-booster, especially ahead of the advance tax outflows, Bond prices may not move much now and all eyes would shift to state development bonds auction. Intraday range maybe seen between 7.59%-7.65%.
Outlook
Trend: The USD/INR pair has shown some strength after taking support at 67.08 levels. Technical bounce is expected up to levels of 67.50.
Exporters were advised to cover their position as the stoploss of 68.40 was triggered (They are suggested to discuss their positions with their respective advisors).
Importers are advised to cover partially around 67.20 for the near month (They are suggested to discuss their positions with their respective advisors).
Short term range (7-15 days): 67.10 - 68.00
Medium term range (3-6 months): 67.00 - 70.00
The ResearchTeam @ IFA Global
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