MARKET WATCH FRIDAY 28TH NOV. 2014 FOREX Some amount of volatility could be induced by month-end flows in low volume environment. However the trends and ranges are expected to remain intact. Euro (1.2455) remains in a range with no confirmed trends in short term. Expect it to trade within the range of 1.250-1.2440 over next two days. Pound-Dollars (1.5718) is also in range moving in a channeled formation. Its ranges are 1.5800 and 1.5700. The range extension is limited to 25 pips on either side. Dollar-Yen (118.2) gained on lower Crude oil on thin trades. It is unlikely to break above 118.50 over next few days. Dollar-Rupee (61.87) has continued its range trades. We expect this range of 62.10-61.65 to hold at least for next two days until the RBI meet. We are changing the stance on Aussie-Dollar (0.8507) and now consider that this is probably not in range as expected few days back. The lower commodity prices, with Crude oil leading lower, will adversely impact Aussie and the long term decline would be inline with lower growth expectations. INTEREST RATES Falling Oil prices seem to drive the interest rates lower. Globally yields are all down and may fall further in the near term. The US 5Yr (1.528%), 10Yr (2.20%) and 30Yr (2.92%) has dropped sharply. The yield rates have been falling as expected and may reach lower towards the end of this year. The 10Yr may fall as low as 2.15% in the coming weeks. Overall yields may fall in the near term. The Japanese Yen (118.18, +0.40%) weakened yesterday leading to a decline in the Japanese bonds. The 2Yr (0.004%), 5Yr (0.107%) and the 10Yr (0.421%) have fallen a bit with the 10 Yr yield falling at a greater pace. Overall the yields are heading lower with no immediate signal of any reversal. The German 10 Yr (0.70%) has also fallen sharply from 0.735%. The Euro (1.2457, -0.08%) has fallen from immediate resistance near 1.25 and if that holds may fall towards 1.24-1.23 in the coming weeks. The Indian 10Yr GOI (8.147%) is stable for now but a fall further towards 8% cannot be negated unless we see a bounce from here immediately.
Posted on: Fri, 28 Nov 2014 05:06:21 +0000
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