Commodity Report 10th February 2020

Weekly change & technical levels NSE/BSE/MSEI February Futures Currency pair LTP Wk  % change R1 R2 Pivot S1 S2 USDINR 71.52 -0.06 71.8367 72.1533 71.5333 71.2167 70.9133 EURINR 78.47 -0.73 79.3450 80.1975 78.8675 78.0150 77.5375 GBPINR 92.55 -1.36 94.0300 95.4650 93.1750 91.7400 90.8850 JPYINR 65.21 -0.84 66.1200 67.0500 65.3600 64.4300 63.6700   Currencies against the US dollar Currency pair LTP Wk  % change R1 R2 Pivot S1 S2 DOLLAR INDEX 98.72 1.38 99.1567 99.6133 98.2633 97.8067 96.9133 EURUSD 1.0945 -1.29 1.1046 1.1147 1.0993 1.0892 1.0839 GBPUSD 1.2883 -2.42 110.410 111.080 109.350 108.680 107.620 USDJPY 109.74 1.29 1.3085 1.3286 1.2982 1.2781 1.2678   Foreign exchange reserves   31 January 2020 Weekly change Total reserves at $471.30 bln up $4.607 bln Important highlights The RBI MPC maintained status quo and kept the repo rate and reverse repo rate steady at 5.15% and 4.90%, respectively, while the marginal standing facility (MSF) rate and the bank rate were maintained at 5.40%. US Purchasing Managers Index (PMI) stood at 50.9 in January, rising from 47.8 in December, showed the report. India’s PMI climbed to a near 8-yr peak at the start of 2020 due to a sharp rise in new business and production. France’s December industrial production was at -2.8% as compared to -0.3% m/m expected, while the previous figure was +0.3%. France’s December trade balance stood at -€4.05 billion as compared to -€5.15 billion expected; the previous figure was -€5.58 billion and the current account balance was at -€0.6 billion, against the previous figure of €0.5 billion. Canada’s January Markit manufacturing PMI stood at 50.6 as compared to the previous figure of 50.4. China’s Caixin Markit services PMI for January stood at 51.8 as compared to previous reading of 52.0. US nonfarm payrolls for the month rose by 225,000, up from a rise of 145,000 in December, and jobless rate rose to 3.6% of the workforce from 3.5%. US average hourly earnings, a measure of wage inflation, rose 0.2% in January, and were up 3.1% year on year. Canada net changes in employment for January stood at 34,500 as compared to the previous reading of 17,500. The USDINR pair retreated from the weekly high of 71.85 and dropped to a weekly low 71.23, and settled at 71.53. The falling crude oil prices, which hit a 13-month low on growing concerns over China's deadly coronavirus, led to lower dollar demand from oil importers. However, downside momentum remained limited and the pair scaled a high of 71.6150 again, as the greenback strengthened more than 1% and the Chinese yuan plunged 0.91%. The Chinese yuan weakened as sentiments weakened owing to the country's coronavirus. However, the currency gained slightly after the Chinese central bank’s stimulus and Thursday's surprise Chinese announcement of tariff cuts on US imports. Technically, as per last week’s outlook, the USDINR pair retreated from 71.85 and tested 71.23, close to the first predicted target of 71.20. The weekly price action resulted in the formation of a bearish spinning-top candlestick, which is indicating a bearish momentum in the near future. However, following the ongoing global factors, downside momentum expects to be limited and pair may rebound from 71.20­–71.00 again. On the downside, a break below 70.80 only will cause selling pressure, and the pair may test the next support of 70.55. The dollar index, which tracks the greenback against a basket of six major currencies, settled at 98.70 as compared to the previous week’s close of 97.36, up 1.38%. The US dollar gained against its major counterparts after factory goods orders for December saw the largest gain since August 2018. The dollar strengthened on Friday, after US nonfarm payroll data improved in January, shrugging off expectations that a continued slowdown in US wages will weigh on the pace of inflation and keep interest rates lower for longer. Also, ongoing fears that the UK and EU are set for rocky Brexit trade talks in the coming months weighed on the sentiment. From a technical standpoint, the formation of a bullish Marubozu candle stick on the weekly chart is indicating a bullish momentum in the near future. Further, the 100 SMA and 200 SMA are showing a bullish crossover, which is also supporting the bullish outlook. In the near future, the dollar index is expected to break its next resistance of 99.05 and may test 99.50–99.80. On the downside, crucial support is seen at 98.20, and a break below this level is expected cause the index to test the next support of 97.80–97.55. The EURINR pair witnessed a 0.70% fall last week. The pair retreated from the weekly high of 79.7725 and dropped towards 78.3975 before closing at 78.47. The euro came under pressure against the rupee and US dollar on Friday following dismal industrial production data from Germany and France data, which led the common currency lower. The US dollar gained against major counterparts after factory goods orders for December month saw the largest gain since August 2018. However, the fall in the pair remained capped and the pair found some support after the unemployment rate in the euro area ticked down in December.   On the weekly chart, since 12 January 2020, the EURINR pair is consolidating around 79.50–78.60 and formed a long bearish candlestick, which is indicating a bearish momentum in the near future. This week, a break below 78.35 would extend the recent fall, and the pair may test the next support of 77.9–77.65. Alternatively, a failure to break this level could create a probability for a momentum recovery toward the immediate resistance of 78.75–79.20 again. The GBPINR pair witnessed a gain of 1.54%, its biggest weekly fall since 5 January 2020, and settled at 92.55 as compared to the previous week’s close of 93.87. The pound is back in doldrums as concerns about a chaotic Brexit at the end of the year loom ahead; the pair plunged below its three week low of 92.3225, after headlines of the European Union (EU) suggesting an adjustment in the MiFID II regulations, which could worsen the UK’s business prospects in Europe going ahead. The UK is a net exporter of financial services to the EU and the move appears to be a clear attempt by the EU to weaken the dominance of London following Brexit. The UK and EU are set to get trade talks started in March. Technically, a bearish inside-bar candle formation was noted on the weekly chart, which is indicating a bearish momentum in the near future. However, since 22 December 2019, the GBPINR pair is consolidating above the support of 91.98, and the pair need to close below it. Only a break below 91.98 will create the probability for a correction towards the next support of 91.50–91.00. Alternatively, a sell on rise could expected from 93.75–93.85 levels, and stop-loss will be above 94.60. High impact economic data & events scheduled during the week       Date Time Currency Economic Indicators Forecast Previous Impact 11.02.20  3:00pm GBP Prelim GDP q/q 0.00% 0.40% Negative   7:30pm EUR ECB President Lagarde Speaks - - -   8:30pm USD Fed Chair Powell Testifies - - -   9:05pm GBP BOE Gov Carney Speaks - - - 12.02.20 6:30am NZD Official Cash Rate 1.00% 1.00% Neutral     NZD RBNZ Monetary Policy Statement - - -     NZD RBNZ Rate Statement - - -   7:30am NZD RBNZ Press Conference - - -   8:30pm USD Fed Chair Powell Testifies - - - 13.02.20 12:40am NZD RBNZ Gov Orr Speaks - - -   5:45am AUD RBA Gov Lowe Speaks - - -   7:00pm USD CPI m/m 0.20% 0.20% Neutral     USD Core CPI m/m 0.20% 0.10% Positive 14.02.20 7:00pm USD Core Retail Sales m/m 0.30% 0.70% Negative     USD Retail Sales m/m 0.30% 30.00% Negative Note: Economic data expectations are based on median forecast by economists or Reuters and Bloomberg survey. Here, a positive impact indicates currency could appreciate and negative indicates currency could depreciate against the US Dollar. Technical Chart Source: Tickerplant*DOS- Depends on statement. DOV- Depends on Votes. DOR- Depends on Report. Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (IndiaNivesh), for use by the recipient as information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or published or made available to others, in whole or in part without prior permission from us. This document is not to be construed as an offer to sell or the solicitation of an offer to buy any currency pair. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. The information contained in this document has been obtained from sources that are considered as reliable though its accuracy or Completeness has not been verified by IndiaNivesh independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any responsibility or whatever nature for the information, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this material only. IndiaNivesh directors and its clients may have holdings in the currencies mentioned in the report.)

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