India Forex Advisors / Market Commentary / 30_Aug

By IBTimes Staff Reporter | August 30 2010 4:31 AM

The index of the dollar against six major currencies is trading at 82.86 down marginally by 0.06%. One-month offshore NDF contracts were quoted at 46.96/47.06 weaker than the onshore spot rate.The upside Break of USDINR above the 47.30 levels and Dollar Index below 83.50 mark, would be significantly weaker for rupee. Earlier, Exporters were advised to hedge it's near term exposure near 46.90-95 region, will fresh exports can also be again targeted towards 46.90-47.00 onwards. Importers can look to buy on any dips.

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Outlook: Medium term-slightly bearish.

Global Markets:

The Dollar risk was put back in the market after better than expected US GDP and strong words of support from Fed Chief Bernanke at the Jackson Hole. Q2 GDP was revised lower to 1.6% vs. 2.4% initially released but was better than the 1.4% q/q expected. Fed Chief Bernanke reopened the door on additional monetary easing if the US economy was to further deteriorate. The Yen started moving higher in Asia on talk that the PM Kan would be holding a special press conference on the Yen strength. July Unemployment Rate is forecast at 5.2% vs. 5.3% previously. Meanwhile, Euro was well supported on USD weakness and comments from the ECB's Weber that Europe was on the verge of a self-sustaining recovery. Bigger moves where seen through the EUR/JPY which rallied near 2 Yen. August German CPI fell 1.0% vs. 1.2% previously y/y. Elsewhere, Sterling Q2 GDP was upgraded to 1.2% vs. 1.1% initially released. GBP/USD was sold however at the start of the US session on reported comments from a UK opposition politician UK economy was about to be 'hit from a hurricane' .

Technical Outlook:

EURO: The Euro was brought down from the friday's high of 1.2780 levels to current 1.2738 levels. Immediate resistance continues to be at 1.28 levels while the support continues to be near 1.26 levels. Rangebound session can be seen for the day. Medium term tone: Neutral to slight bearish.

GBP: The Pound bottomed at 1.5440 levels on friday pressing the pair towards 1.5370 levels. Selling on higher levels with stoploss in place can be seen. Risk continues to be on the downside for the pair. Medium term tone: Neutral to bearish .

JPY: Usd/Jpy showed a good momemtum rallying to as high as 85.90 levels breaking the strong resistance 85.20 momentarily. The trend remains bearish overall for the yen heading towards 87 levels. Support is seen near 82.85 levels(last low). Outlook for Yen: Bearish towards 87-88 levels in Medium term .

AUD: The Aussie tested the highs of 0.90 levels and is currently trading at 0.8986 levels. Immediate resistance can be seen near 0.9045 levels(61.8% retracement of the recent fall) from where it can fall to take the support of 0.8950 (21 day Daily EMA). Bias: Overall weak .

GOLD: Gold($1235) gave a very thin trading session on friday sustaining the highs of $1244 levels. Strength in stock markets continues to support gold prices. The next resistance comes near $1262 levels(high of 27 June) Medium Term remains- Bullish.

Dollar Index: Dollar index is currently trading at 82.68 levels and edged higher to 83.56 last week but failed to sustain above 83.45 cluster resistance (38.2% retracement of 88.70 to 80.08 at 83.37) and turned sideway. A short term top is formed and some more sideway trading should be seen in near term. Nevertheless, downside is expected to be contained by 81.92 support and bring another rise. Sustained trading above 83.45 will confirm that correction from 88.70 has completed at 80.08 and will target 61.8% retracement at 85.40 at least.