Euro plunged on weak data and concern over Greece bailout
Visit us at www.sharekhan.com April 08, 2015 Euro plunged on weak data and concern over Greece bailout News and development z Spanish Services PMI increased to 57.3 levels in March from 56.2 marks in February z Italian Services PMI rose to 51.6 marks in March from 50.0 levels in February z Europe Final Services PMI declined to 54.2 levels in March from expectation of 54.3 marks z UK Services PMI increased to 58.9 levels in March from 56.7 levels in February z US JOLTS Job Opening increased to 5.13M in February from 4.97M in January US DOLLAR INDEX (DX) INR pairs Pair Name Pre. close Net Chg (%) USD-INR 62.56 0.10% EUR-INR 67.96 -1.00% GBP-INR 93.20 -0.22% JPY-INR 52.16 -0.64% Major indices Indices Pre. close Net Chg (%) 17875.42 -0.03% Nifty 8660.30 0.00% Dax 12123.52 1.30% Nikkei 19640.54 1.25% Dow Jones Major currencies Currency LTP EUR-USD 1.0812 GBP-USD 1.4810 USD-JPY 120.3210 Commodities Commodity Brent crude USD/bbl Gold USD/t oz LME 3-month copper LTP 59.10 1209.2 6065 US Dollar increased by 1.13 percent in yesterday’s trading session on the back of strong economic data from US. US JOLTS Job Opening increased to 5.13M in February from 4.97M in January. However, a sharp gain was capped on the back of weak Non-Farm payrolls data on Friday. Economy added fewer jobs than expected. Weak job data pushed back investor’s expectation of early rate hike by US Federal Reserve. USD-INR: The Indian rupee depreciated by 0.12 percent in yesterday’s trading session on the back of strong dollar globally after positive economic data from US. Further, increase in demand for dollar from importers amid rebound in crude oil prices. Indian Rupee tracked weakness in other Asian Currencies. Meanwhile, RBI at its first bi-monthly monetary policy 2015-16 maintained status quo. In intraday Indian Rupee touched a low of 62.40 and closed at 62.26 against Dollar. Outlook: Indian Rupee is expected to trade with negative bias on the back of strong dollar globally. Further, investors will remain cautious ahead of FOMC meeting minutes. Rise in demand for dollar from importers after rebound in crude oil prices may hurt rupee. Indian Rupee may track weakness in other Asian Currencies. Dollar buying from lower levels may be witnessed. However, rise in risk appetite in the global markets may prevent sharp fall in Rupee. USDINR April expected to trade in a range between 62.35 on lower side to 62.80 on higher side with upward trend. EUR-INR: Euro depreciated by 1.09 percent in yesterday’s trading session on the back of strong dollar after positive economic data from US. Further, disappointing economic data from euro zone added downside pressure. Europe Final Services PMI declined to 54.2 levels in March from expectation of 54.3 marks. Additionally, Divergence in the global monetary policy and worries over Greece bailout weighed on euro. Euro remained under pressure amid uncertainty regarding Greece payment to IMF. In intraday Euro touched a low of 1.0801 and closed at 1.0812 against Dollar. Outlook: Euro currency expected to remain under pressure on the back of strong dollar. Further, expectation of decline in retail sales may add downside pressure. Worries over Greece bailout and uncertainty regarding Greece payment to IMF may hurt euro. Greece and international creditors are negotiating but no formal agreement has been reached. IF Greece repays IMF it will run out of money. Greece owes the International Monetary Fund more than €460 mil on a morning view (currency) loan from its 2010 bailout. Additionally, divergence in Global monetary policy may add downside pressure. US Federal Reserve refrain from early rate hike but signaled rate hike could be by June, whereas ECB started its QE program to fight against deflation and revive economic growth. EURINR April expected to trade in a range between 67.2 on lower side and 68.3 on higher side with downward trend. GBP-INR: Pound depreciated by 0.51 percent in Yesterday’s trading session despite of service growth accelerated to seven month high due to strength in dollar globally amid strong economic data from US. Further, uncertainty over UK general elections added downside pressure. Market expects Bank of England to maintain its monetary policy unchanged on Thursday. In intraday Pound touched a low of 1.4801 and closed at 1.4810 against Dollar. Outlook: Pound is expected to trade under pressure due to strong dollar globally. Further, uncertainty over UK general elections may add downside pressure. General elections are scheduled to take place on May 7 and most of the polls show no clear majority with the result of hung parliament. Market expects Bank of England to keep its monetary policy unchanged on Thursday. Investors will remain cautious ahead of FOMC meeting minutes. However, sharp downside may be cushioned on the back of strong economic data. GBPINR April expected to trade in a range between 92.4 on lower side and 93.40 on higher side with sideways trend. JPY-INR: Japanese Yen depreciated by 0.71 percent in yesterday’s trading session on the back of strong dollar and rise in risk appetite in the domestic markets. Demand for dollar went up after strong economic data from US. Further, investors remained cautious ahead of FOMC meeting minutes and BOJ monetary policy meet. In intraday Yen touched a low of 120.447 and closed at 120.321 against Dollar. Outlook: Yen is expected to trade negative amid strong dollar globally coupled with rise in risk appetite in the global markets. Further, weak economic data from Japan may add downside pressure. Investors will keep an eye on BOJ meet outcome. BOJ is expected to keep its monetary policy unchanged. However, sharp fall in Yen may be prevented as conflicts in the Middle East may lead to the rise in demand for safe haven. JPYINR April expected to trade in a range between 51.7 on lower side and 52.45 on higher side with downward trend. Global economic data Data Country Date Monetary Policy Statement Japan 04/08/2015 Tentative - - German Factory Orders m/m Europe 04/08/2015 11:30am 1.5% -3.9% BOJ Press Conference Japan 04/08/2015 Tentative - - High UK 04/08/2015 2:00pm - - Medium Europe 04/08/2015 2:30pm -0.1% 1.1% Medium FOMC Member Dudley Speaks US 04/08/2015 7:00pm - - Medium Crude Oil Inventories US 04/08/2015 8:00pm - 4.8M Medium FOMC Meeting Minutes US 04/08/2015 11:30pm - - BOE Credit Conditions Survey Retail Sales m/m Sharekhan Time 2 April 08, 2015 Expected Previous Impact High Medium High
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