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Currency Weekly

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19 July 2010 INR Exchange Contract S 2 S1 Close R 1 R2 Recommendation NSE Aug 2010 45.7200 46.0200 47.0002 47.3100 47.7400 Buy at 46.89 TP 47.45/47.70 SL 46.50 MCX-SX Aug 2010 45.7200 46.0200 47.0002 47.3100 47.7400 Buy at 46.89 TP 47.45/47.70 SL 46.50

INDICATORS LAST 1 week ago % Change FUNDAMENTAL REVIEW: LIBOR 1Mth 0.3381 0.3409 -0.82 LIBOR 3Mth 0.5213 0.5268 -1.06 MIBOR 1Mth 0.6000 0.5500 9.09 The Indian moved quite volatile and settled on MIBOR 3Mth 0.8600 0.8200 4.88 46.7725 levels depreciated by 10 from the previous U.S. 5Yr Bond Yield 1.7392 1.8353 -5.24 U.S. 10Yr Bond Yield 2.9772 3.0520 -2.45 week. During the last two days of week, rupee moved India 5Yr Bond Yield 7.3740 7.3970 -0.31 tandem with domestic market. Rupee pressurized during India 10Yr Bond Yield 7.6340 7.6500 -0.21 Reference rate 46.8000 46.7500 0.11 the week on account of narrowed domestic indices, heavy CBLO rate 4.6900 5.4900 -14.57 Call Rate 5.7000 5.6800 0.35 buying of by importers and weak global sentiment. Dollar index continuously falling as strengthen against

ASIAN/INR LAST 1 week ago % Change greenback. During last week, INR depreciated more then 46.7725 46.6644 0.23 other Asian. Chinese Yuan 6.9040 6.8900 0.20 Hongkong Dollar 6.0170 6.0100 0.12 Moreover, increased in continuing job claims and lower in Indonesian Rupiah 0.5173 0.5158 0.29 Myanmar Ringgit 14.5800 14.5900 -0.07 manufacturing data declared by US and decreased in Philipinnes Peso 1.0099 1.0105 -0.06 growth of china depicts weak global sentiment. 33.9779 33.7780 0.59 S Korean Won 0.3887 0.3902 -0.40 Asian equity also remained lower on account of China Taiwan Dollar 1.4567 1.4562 0.03 floated its currency and made stringent rule on Thailand Baht 1.4514 1.4461 0.37 construction and mortgage loan which curb the Asian market growth. This dragged down the Asian equity Pair LAST 1 week ago % Change USDINR 46.80 46.75 0.11 market, and domestic indices followed the same and GBPINR 72.08 68.72 4.89 remained in narrow range. JPYINR 100 53.66 52.81 1.61 EURINR 60.37 59.36 1.70 The Dollar Index- a gauge of the greenback’s movement against major global six decreased by 1.7 Particular (in USD MIO) LAST 1 week ago % Change percent. Foreign Current Asset 252129.00 251383.00 0.30 Special Drawing Rights 4919.00 4864.00 1.13 India’s foreign funds flows are the main drivers of rupee, Gold Reserves 19894.00 19423.00 2.42 further flows in the equity market affect the rupee as well. Total FOREX Reserves 278267.00 276980.00 0.46 So far in July 2010, foreigners have purchased net a net $8.4 billion, compare to last year $17.5 billion dollar.

In last two days movement in on-shore and off-shore premium made impact on rupee. The NDF were quoted at

47.26 while on shore forward market quoted 46.96.

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Currency Weekly

A W e e k l y Comprehensive Report on Currency

TECHNICAL SNAPSHOT

The Indian rupee traded sideways to higher in last week by extending the previous trend. After making a high of 46.9450 it settled at 46.7000 levels. Market is trading above weekly short term and medium term EMA suggests rupee to remain higher. However, immediate resistance is at 47.1500 levels on break above is likely to test 47.7400. The momentum indicator RSI (14) weekly is treading at 0.59 levels and showing a higher potential. The crucial support is at 46.3000 levels if market sustains above the same possible to remain rupee higher in short term

OUTLOOK

Week ahead, the host of new data releases from the Us Include Consumer price index, Net TIC inflow and Michigan confidence data, housing starts(mom), Existing homes sales and US leading indicators are lower than prior which put pressure economic growth. While last weak, lower advance retail sales, decreased in manufacturing data already stated chances of deflation and recession in economy.

Investor need to watch on dollar index as it volatile during last week and dollar shed on account of expectation of flattering economy, which might give some relive for rupee.

In July government of INDIA allow 51% percent foreign direct investment (FDI) in retail sales sector and 100 percent in wholesale market on carry trade which attracts capital inflow into the market.

While RBI extends second LAF (Liquidity adjustment facility) for next 30th JULY, which also increase money supply into market, this step by RBI would be depreciate rupee in near term while meet on 27th July expected increase in interest rate which might made mixed impact on rupee. Overall rupee trade sideways, major movement on rupee relates to dollar if it weakened it will make rupee to appreciate.

Technically speaking, we expect to trade higher and recommend buying.

CROSS LAST 1 week ago % Change CROSS LAST 1 week ago % Change

USDINR 46.77 46.66 0.23 INR SPOT 46.77 46.66 0.23 EUROINR 60.41 58.99 2.40 MCX-SX Futures 46.83 46.80 0.05 GBPINR 71.57 70.30 1.81 NSE Futures 46.85 46.80 0.09 JPY (100) Futures 54.03 52.68 2.56 1 Month NDF 46.96 46.78 0.38 MYR 14.58 14.59 -0.07 1 Month FORWARD 46.97 46.86 0.23 SGD 33.98 33.78 0.60 NIFTY 5393.90 5352.45 0.77 DOLLAR INDEX 82.49 83.95 -1.74 SENSEX 17955.82 17833.54 0.69

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Currency Weekly

A W e e k l y Comprehensive Report on Currency

DOLLAR INDEX

Exchange Contract S 2 S1 Close R 1 R2 Recommendation Dollar Index SPOT 81.850 82.320 82.624 82.890 83.430 Sell at 82.786 TP 82.100 SL 83.20

TECHNICAL SNAPSHOT

Dollar index fell sharply in last week by extending the previous trend. Overall, it fell as much as 1.7% from previous close. Market has breached the trend line support near 83.68 levels and closing below the same suggesting market to remain lower. Closing below the

weekly short term EMA renders sideways to lower movements. However, the support is at 81.80 levels on breach and sustained trade below likely to test 80.60 levels. The momentum indicator RSI (14) weekly is treading at 0.48 levels and showing a lower potential

OUTLOOK

We expect dollar index to trade lower and recommend selling

CROSS LAST 1 week ago % Change NASDAQ 2179.05 2196.45 -0.79 DJIA 10097.90 10198.03 -0.98 S/P 500 INDEX 1064.88 1077.96 -1.21

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Currency Weekly

A W e e k l y Comprehensive Report on Currency

EUR / USD- SPOT

Exchange Contract S 2 S1 Close R 1 R2 Recommendation EURO /USD SPOT 1.2550 1.2720 1.2930 1.3180 1.3450 Buy at 1.2850 TP 1.3200 SL 1.2670

FUNDAMENTAL REVIEW

The European currency appreciated against US on

PARTICULARS THIS WEEK LAST WEEK % CHANGE account of weak US economic condition. During a week MXEM EMU INDEX 82.2400 85.4000 -3.70 euro appreciated nearly 2 percent. Moreover, US EUR1M BGN Curncy 1.2371 1.2391 -0.16 released weak economy data which might fuel investor EUR3M BGN Curncy 1.2376 1.2397 -0.17 to move towards euro. Moreover, during the week euro supported by positive macro data released and Greece passed Treasury bond auction which boost investor sentiment for euro.

While, European stock down two week lower on account of lower growth of china and possibility of situation of deflation arise in US made impact on European market.

As smoothed auction in Portugal, Spain and Greece eased worries for stress crises in Europe.

Most market participant and Investor believe that euro will stay under selling pressure for the long term on concerns that debt problems in some euro zone countries are spreading.

TECHNICAL SNAPSHOT

Euro witnessed upside movement in last week by extending the previous trend. After making a high of 1.3008 it settled at 1.2930 levels. Market is witnessing a trend line support near 1.2600 levels sustains above possible to remain higher. As OUTLOOK per the Fibonacci principle crucial level is at 1.2647 (23.6% The result of stress test of European bank would be retracement of the range 1.5141-1.1877 levels), which is declared on next week, which made impact on euro likely to trade sideways to higher in short term. The currency. Government and European countries has to momentum indicator RSI (14) weekly is trading at 0.47 take quick step to maintain growth of economy. levels and showing a high potential.

Technically, we expect Euro to trade higher and recommend buying.

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Currency Weekly

A W e e k l y Comprehensive Report on Currency

GBP/USD- SPOT

Exchange Contract S 2 S1 Close R 1 R2 Recommendation GBP/USD SPOT 1.4780 1.5060 1.5301 1.5520 1.5760 Buy at 1.5200 TP 1.5520 SL 1.5060

FUNDAMENTAL REVIEW CROSS LAST 1 week ago % Change FTSE 100 INDEX 5158.85 5132.94 0.50 The British pound volatile against dollar as standard DAX INDEX 6040.27 6065.24 -0.41 and poor concerned over increase in public debt but GBP1M BGN CURNCY 1.53 1.51 1.57 GBP3M BGN CURNCY 1.53 1.51 1.56 later on jobless claims fell and cut in government spending boost the investor sentiment.

The pound lost against euro on account of stronger sentiment that European countries contain the sovereign debt crisis.

Moreover, lack of confidence in us economy on account of FOMC meet which stated that US economy still suffered and take long time to recover.

While bond giant Pacific investment company stated safe to invest in bond issued by U.K

Moreover, UK consumer confidence eroded on account of increase in current account balance and decrease in house price which state that consumer spending decrease in market.

TECHNICAL SNAPSHOT British pound traded higher in last week by reversing the previous trend. After making a low of 1.4949 it settled at 1.5301 levels. Closing of the previous two weeks candle OUTLOOK resembles “Bullish engulfing” pattern suggesting upside The remain volatile on account of movement. As per, Fibonacci principle key level to watch is next week UK declared budget with significant cut in at 1.5240 levels (38.2% retracement of the range 1.6878- government spending and raise in taxes. While 1.4231 levels). In case market breaches the support at 1.5240 expected to test 1.5472 levels. Trading above the result on European stress test affect the market. weekly short term EMA suggests market to remain higher. Technically we expect to trade higher and recommend buying near support levels

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Currency Weekly

A W e e k l y Comprehensive Report on Currency

USD/JPY -SPOT

Exchange Contract S 2 S1 Close R 1 R2 Recommendation USD/JPY SPOT 83.2 84.8 86.57 88.40 90.30 Sell at 87.4 TP 85 SL 89

FUNDAMENTAL REVIEW CROSS LAST 1 week ago % Change NIKKIE INDEX 9408.36 9585.32 -1.85 The rose against of dollar on account of JPY1M BGN CURNCY 86.54 88.59 -2.32 investor sentiment eroded against us economy which JPY3M BGN CURNCY 86.46 88.52 -2.32 increases the demand for yen. Yen also appreciate

against and as it more related to US economy.

On 15th July data released showed investor increased buying bond and stock compared to buy by Japan depicts investor’s confidence increase in Japanese economy on account of uncertainty of stress test result and weak confidence level in US.

Japan exports its product to china and US if US weakened it will affect Japan exports.

Last week, IMF asked Japan to raise sales tax, on account of increase in massive debt of Japan. Increase in savings by public leads Japan to borrow fund, which increase the sovereign crisis risk over long term.

TECHNICAL SNAPSHOT

Japanese yen fell sharply in last week by reversing the previous trend and after making a high of 89.16 it settled at 86.57 levels. Closing of the previous weeks candle renders sideways to lower movements. Market is likely to see a OUTLOOK mild higher correction before resuming its downtrend. The stiff resistance is at 88.20 levels sustain below the same is Japanese yen could strengthen or flat on account of likely to resume its downtrend. On the lower side support uncertainty of stress test result and depreciate in dollar. is at 86.27 on break below expected to test 84.83 levels. Moreover, increase in tax policy by government will also The momentum indicator RSI (14) weekly is treading at made impact on economy. 0.39 levels and still has the potential to move lower. Trading below the weekly short term and medium term Technically we expect we expect yen to trade lower EMA suggests market to remain lower. and recommend selling near resistance levels.

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Currency Weekly

A W e e k l y Comprehensive Report on Currency

ECONOMIC DATA RELEASES Date Time Event Survey Actual Prior Revised 07/19/2010 EC ECB Euro-Zone Current Account SA MAY - - - - -5.1B - - 07/19/2010 13:30 EC Euro-Zone Current Account nsa MAY - - - - -6.9B - - 07/19/2010 14:30 EC Construction Output SA MoM MAY - - - - -0.30% - - 07/19/2010 14:30 EC Construction Output WDA YoY MAY - - - - -6.10% - - 07/19/2010 15:30 GE Bundesbank Publishes Monthly Report 23-Apr 07/19/2010 19:30 US NAHB Housing Market Index JUL 16 - - 17 - - 07/20/2010 GE Producer Prices (MoM) JUN 0.20% - - 0.30% - - 07/20/2010 11:30 GE Producer Prices (YoY) JUN 1.10% - - 0.90% - - 07/20/2010 US Housing Starts JUN 580K - - 593K - - 07/20/2010 US Housing Starts MOM% JUN -2.20% - - -10.00% - - 07/20/2010 US Building Permits JUN 575K - - 574K - - 07/20/2010 US Building Permits MOM% JUN 0.20% - - -5.90% - - 07/21/2010 02:30 US ABC Consumer Confidence 18-Jul - - - - -44 - - 07/21/2010 16:30 US MBA Mortgage Applications 16-Jul - - - - -2.90% - - 07/22/2010 12:00 IN Primary Articles WPI YoY 10-Jul - - - - 16.25% - - 07/22/2010 12:00 IN Fuel Power Light WPI YoY 10-Jul - - - - 14.27% - - 07/22/2010 GE PMI Manufacturing JUL A 58 - - 58.4 - - 07/22/2010 GE PMI Services JUL A 54.5 - - 54.8 - - 07/22/2010 EC PMI Composite JUL A 55.5 - - 56 - - 07/22/2010 EC PMI Services JUL A 55 - - 55.5 - - 07/22/2010 EC PMI Manufacturing JUL A 55.1 - - 55.6 - - 07/22/2010 EC Industrial New Orders SA (MoM) MAY -0.10% - - 0.90% 0.60% 07/22/2010 14:30 EC Industrial New Orders SA (YoY) MAY 20.00% - - 22.10% 21.80% 07/22/2010 US Initial Jobless Claims 17-Jul 445K - - 429K - - 07/22/2010 US Continuing Claims 10-Jul 4590K - - 4681K - - 07/22/2010 18:30 US RPX Composite 28dy Index 31-May - - - - 192.52 - - 07/22/2010 18:30 US RPX Composite 28dy YoY MAY - - - - 2.36% - - 07/22/2010 US Existing Home Sales JUN 5.10M - - 5.66M - - 07/22/2010 US Existing Home Sales MoM JUN -9.90% - - -2.20% - - 07/22/2010 US House Price Index MoM MAY -0.30% - - 0.80% - - 07/22/2010 US Leading Indicators JUN -0.30% - - 0.40% - - 07/22/2010 EC Euro-Zone Consumer Confidence JUL A -17 - - -17 - - 07/23/2010 13:30 GE IFO - Business Climate JUL 101.5 - - 101.8 - - 07/23/2010 13:30 GE IFO - Current Assessment JUL 101.8 - - 101.1 - - 07/23/2010 13:30 GE IFO - Expectations JUL 101.6 - - 102.4 - -

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Currency Weekly

A W e e k l y Comprehensive Report on Currency

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