Greek's Bailout Saga - To Be or Not To Be

Deliberations about Greece’s next round of possible bailout tranche will conclude today- 20th November, 2012; wherein possible ease on pressure could be found in EUR/USD as topics on lowering the debt-ratio (amount of debt held on GDP by the economy…where lower debt is positive for the currency) or extending the dates on debts that is to be re-paid by Greece.

This meeting is fairly important as Eurozone Finance Ministers are meeting up determined in extending the amount of time that is required for bridging the gap of the deficits, which would help the reduction of these deficits by EUR 32.6 Billion till 2016; moreover delaying the decision of Greece bailout of EUR 31.5 Billion.

So why is there a high uncertainty in the market today…awaiting for results on the meeting?

Yes, out of the total EUR 164.5 Billion the IMF contribution is only just above 1/6^th of the total which is about EUR 28 Billion…however what’s important is that its not the meeting that the market is concerned about but the clash with the IMF Chief who is reluctant in extending the loan repayment deadline by 2 years. Earlier it was agreed that Greece would re-pay the debt with 4.5% as surplus on its GDP by 2014; however Euro Zone is reluctant on rigidity of IMF and it would not accept the 2014 deadline.

The Saga of trouble in Greece…

It has been confirmed by the Greek Prime Minister Antonis Samaras where he stated that his government will run out of money by mid-November if it fails to secure the loan installment. Now Two things remain that would result in either the EUR/USD run-up on the upside or another falter towards 1.2650 levels.

   1)  The amount of loan is required by Greece and that is for sure and therefore a positive vibe by allowing another tranche of aid by the Euro Zone could be provided there shall be no restrain by Germany which all-in-all is reluctant to provide more amounts towards its bailout program. So another round of bailout package “Which we are highly expecting” should boost EUR/USD higher.

   2)  The extension: Even though IMF maybe reluctant in extending the deadline, the EURO Zone could intervene by providing more loans (but again Germany would be reluctant in the same as it contributes the highest). So what one can expect from IMF Chief is that even though “IF” and that a BIG “if” it supports in extending the loan repayment it shall ask for additional surplus in its deficit on GDP from current 4.50%.)

   On one end IMF is unlikely for an extension with Germany and even UK reluctant in further amount of spending by the Euro Zone members…But what we anticipate is that an Extension could be achieved with a certain amount of bailout to be awarded by the Euro Zone with revised terms and conditions and thus possibly should drive the market higher…wherein they may overlook on the terms and conditions laid on it.
     




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Perturbing Priorities- Political Effects on The Market

Who Is To Win- A chart represented depicting
 the chances of winning : Barack Obama v/s Mitt Romney 

It is such that 'The Betters and Bookies' throughout all forms of market has discounted Obama's win making him President for the Second Term. ALL in ALL there are more positive aspect that is being portrayed on his win that would push markets overall higher. The so called opposition party who is against Obama (Mitt Romney) has instilled more fear than confidence among small businessman and even in the market as a whole and as such they believe it would be better if the US economic stand (which in a way showed signs of Improvement) is laid in the hands of a Democrat.

The other form where Mitt Romney (Opposition Party) is not being favored is because he disowns quantitative easing and has sworn to sack the Federal Chairman for his decision for more stimulus spending in the past. However what actually threatens the Market as a whole is Romney’s stand against Chinese Currency de-valuation and would brand China as a Currency Manipulator. Many such stands against a Huge Economy such as China could spark Trade war against the developed nation that would mainly start with the Chinese Dumping the US Treasuries, resulting into a major risk for US recovery.

There are many reasons as to why Obama is favored to win this election but there always a factor for too close to call and as such that may go up against optimistic stand in the Capital Markets...

We wouldn't be ill-advising for traders who think market would move higher ...however what is important is that we make a stand after proper Market behavior is determined.

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VIEW ON MAJOR CURRENCY- 20th August, 2012

EUR/USD

EUR/USD:  

We had asked all of our traders to carry forward till Monday (today) on their Short EUR/USD from 1.2375

and Target hit at 1.2290; however which has once again bounced on the upside. However we are still playing on the range and therefore would look at the same levels of resistance in order to go for short levels…however we would be looking for 1.2410/1.2415 for a breach to affirm an upside in the same. Nevertheless we would be initiating short positions at levels around 1.2380 till 1.2390 levels for its downside of 1.2330/1.2335. Only a breach below of 1.2320 would then push it lower to 1.2290 and then towards 1.2255 levels. Considering this is a Holiday with minimal data no major movement could be expected in European Session until the US session opens up, with S&P 500 still holding its resistance on the topside.

However if selling appears to be solid a break of 1.2260/1.2255 would indefinitely push it to 1.2215/1.2202 levels for

today. Nevertheless if sideways movements continue then we would be sticking on the levels instated.

Mode: SIDEWAYS Supports:: 1.2325, 1.225   5 Resistance: 1.2405, 1.2480.

GBP/USD

GBP/USD:

GBP/USD too seems to be playing range bound, however at one stage seemed quite weak after is loss  1.5685/80 levels on Friday and hence we are looking that its trends on the upside be capped till 1.5745 levels. We would be therefore looking for opportunities to go short at levels around 1.5730/1.5745 levels and would negate our downside only if the levels of 1.5752/1.5460 are breached strongly to test its next resistance at 1.5775/1.5780 levels. Therefore any upside should be seen to test 1.5730 levels to go short but should hold it strongly to test 1.5690 followed by 1.5665/60 levels.

Mode: Bearish Supports::      1.5680, 1.5655, 1.5625 Resistance: 1.5750, 1.5782

AUD/USD

AUD/USD: 

On Friday we had asked all our Traders To enter-into Long in AUD/USD at 1.0410/1.0412 levels despite our Positional Call given since August 14th at 1.0560/1.0540 levels and hence achieving our 1st objective around 1.0450/1.0440 levels. We would be covering our long Calls given on Friday over here as the Hourly Charts are well overbought but would be re-instating longs again at 1.0420/1.0408 levels. The levels of around 1.0380 is quite crucial in order to negate the bounce in AUD/USD as the break below would emancipate huge selling in the market for levels to tests 1.0330/1.0315 levels. However considering this would be a sideways day we would be exiting our long calls at 1.0450 levels and hence re-instating longs only if 1.0408 levels are held strongly.

Mode: SIDEWAYS/BEARISH    Supports:: 1.0405, 1.0378, 1.0330 Resistance: 1.0450, 1.0500, 1.0520

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Nifty & USD/INR Report 1st August, 2012

Daily Nifty Analysis

Nifty Analysis_01.08.2102_xDirect India

Indian equities ended the volatile session higher with some buying seen in index heavy weights. The Reserve Bank of India (RBI) has come out with its first quarter Monetary Policy review, albeit policy stance for this meet is in line with general consensus. Again, RBI has maintained its status quo stance and kept the rates unchanged and cut SLR by 1%. At the close, the benchmark 30-share index, BSE Sensex gained 92.50 points or 0.54% at 17,236.18 with 17 components registering rise. Meanwhile, the broad based NSE Nifty climbed by 29.20 points or 0.56% at 5,229.00 with 30 components posting rise.

There is an Immediate Resistance at 5,24040-5,260 levels on the upside, expect selling pressure to continue at higher levels unless index manages to sustain and close above it. The breaks of crucial support of 5,210-5,190 levels expect declines to 5,140 & 5,120 levels in the near term.

View on Indian Rupee

USD/INR Analysis_01.08.2012_xDirect India

The Indian Rupee extended losses on Monday falling to its lowest levels in almost a week led by weak cues across the Asian and European stocks markets and post the acute drop in the Euro on Friday which slipped to its two year lows below the 1.2300 level. Broad weakness in the domestic stock markets also put pressure on the local currency which finished with a loss of a percentage yesterday. It seems even though a slight positive reaction in the European currencies did not aid any boost to risk appetite neither towards appreciation to INR value. We therefore require a more of a fundamental trigger that would enable an upside in the same.

The USDINR pair seems to hold its daily Fibonacci support at 55.74 and if it continues to do so then we are looking at 55.92, 56.08 and then 56.14.

However a break of intraday low which is also the support (Fibonacci) then 55.65 followed by 55.50 would be tested. We keep our bias on the upside.

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Nifty & USD/INR Report- 12th July, 2012

Daily Nifty Analysis

Nifty Analysis By xDirect India

Indian equities extended intraday losses and is near day’s low as traders continued to book profits after a sharp up-move in last session and weak global cues. Brokers said reports of less than average monsoon rains this season might hamper efforts to boost economy and hurt company earnings this quarter impacted the market sentiment. The IMD said that monsoon, the life- line of Indian agriculture, has covered the entire country but rains are still deficient by 23%. Indian markets ended today`s session on a lower note on the back of weak global cues and heavy selling witnessed in auto, FMCG, realty and metal stocks.

The gap down open in the market has definitely enabled the sellers to prompt their activities considering we had yet other depressing FOMC minutes where no sign of QE was provided. This shifted the mindset of traders which now in turn are in selling activities. The immediate resistance comes in at 5290 levels followed by 5325 levels on the rising trend line (former support and now resistance). Expect selling pressure to remain at higher levels unless we have a fundamental trigger which makes the price action to close above 5320 levels, would negate the bearish bias.

View on Indian Rupee

USD/INR Analysis By xDirect India

The Indian Rupee extended losses on Monday falling to its lowest levels in almost a week led by weak cues across the Asian and European stocks markets and post the acute drop in the Euro on Friday which slipped to its two year lows below the 1.2300 level. Broad weakness in the domestic stock markets also put pressure on the local currency which finished with a loss of a percentage yesterday. It seems even though a slight positive reaction in the European currencies did not aid any boost to risk appetite neither towards appreciation to INR value. We therefore require a more of a fundamental trigger that would enable an upside in the same.

The USDINR pair seems to hold its daily Fibonacci support at 55.74 and if it continues to do so then we are looking at 55.92, 56.08 and then 56.14. However a break of intraday low which is also the support (Fibonacci) then 55.65 followed by 55.50 would be tested. We keep our bias on the upside.


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Nifty & USD/INR Report- 9th July, 2012

Daily Nifty Analysis

xDirect India's Nifty Analysis_09.07.2012

The Indian markets are poised to trade lower today tracking weak Asian session, as major cues were taken from Friday’s soft session in US markets due to lower additions in the employment report for the month of June. This has inflamed economic concerns that has actually paved for equity markets to trade lower and thus has indeed choked on Indian equities forcing them to par their mild gains that has been incurred in the previous week.

 The rate cut by ECB and China has been factored in last week, but what keeps pressure going on the equity markets too trade in the negative would be the deprecating value of the home currency and moreover with oil prices shooting back are providing concerns on the debt factors in the economy. However the monsoon climate could have provided some sort of respite in an otherwise bear market conditions.

 Nifty has its immediate support of 5290 (RISING TREND LINE) from where it’s trading at above 5300 levels; nevertheless we have to see a daily close above from its previous week top 5352, which therefore would only negate the bearish front of the market. Supports at 5292, 5270 followed by 5212. Resistance at 5337, 5352is witnessed. We firmly believe that the mild gains could be only due the factor that expectations were high on the US employment conditions, however neither an improved employment numbers nor an increased bets on QE expectations stoked equities higher that resulted in it to build a top and therefore may slide down towards 5250 levels.

View on Indian Rupee

xDirect India's USD/INR Analysis_09.07.2012

The Indian Rupee fell around 0.8% on Friday taking overall weak cues from the global markets amidst dollar demand from importers, overshadowing the sustained capital inflows into the Indian capital markets over past couple of trading sessions.
Amongst the global markets, the EUR/USD fell sharply in evening trade while the US Dollar index jumped firmly above the 83 mark after lower than expected US  data on  Jobs.  The US  Labor Department said on Friday Non-farm payrolls expanded by just 80,000 in June against expectation of 100,000 additions. This triggered a rally in US dollar and government treasury due to ultra safe heaven.
The Indian Rupee is expected to start the week on a negative as sharp drop in the US markets on Friday is and rise in the Dollar index is exerting pressure on Asian Stock and key currency markets. The EUR/USD is trading at two year lows which are further seen impacting the INR on the downside.

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xDirect India
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VIEW ON MAJOR CURRENCY – 6th July, 2012

View On Major Currencies:

View On EUR/USD_xDirect India_06.07.2012

EUR/USD: The US Dollar Index rose for a second consecutive session Thursday, though this climb is still lacking for conviction (traders would use the word ‘momentum’). Taking a look at the fundamental backdrop, general risk trends tell the story. While the S&P 500 slid over the same session – boosting the greenback’s safe haven appeal – the slip follows a string of consecutive advances and did little to pull us back from a two-month high. That said, the market’s ability to hold out hope for another round of supernatural support financial support is quickly drying up. With the ECB passing up the opportunity to fortify the questionable programs trumpeted at the EU Summit, the reality of extremely low rates of return and growing threat of volatility has grown significantly brighter. Perhaps most worrisome of all for risk trends, policy authorities may be signaling their limits with a collective trend away from outright stimulus and toned-down scope of those programs actually pursued.
Mode: Bearish Supports: 1.2350, 1.2287   Resistance: 1.2433, 1.2480, 1.2525

GBP/USD: The Bank of England’s June policy decision – at which they barely avoided an increase to QE – set the stage for this week’s meeting. As expected, the group decided to increase their gilts purchases by 50 billion sterling to bring the program up to 375 billion. Yet, this is neither significantly detrimental nor encouraging to the pound. The stimulus effort by the BoE is still relatively small (compared to the Fed and ECB) and it would ultimately do little to prevent the spread of the EU crisis across the English Channel. We saw cable fell more on the ECB than BoE.
 Mode: Bearish Supports: 1.5484, 1.5450 And 1.5409 Resistance: 1.5550 and 1.5596

USD/JPY: Retail forex speculators remain extremely net-long the US Dollar (ticker: USDOLLAR) against the Japanese Yen, underlining the strength of the broader USDJPY downtrend. We would normally take a contrarian bias to retail trading crowds, and that would imply the USDJPY stands to fall further. Yet it is difficult to reconcile a US Dollar-bearish bias in light of significant developments in other USD pairs—particularly as we believe the EURUSD stands to decline further.
Since last week total long interest has fallen 13 percent while shorts are 7 percent higher. When crowds are net-long yet are no longer buying, our SSI data warns of a potential shift in trend or sideways consolidation. Our USDJPY bias is subsequently neutral in light of sentiment shifts.
Mode: Bullish Supports: 79.70, 79.55 and 78.90 Resistance: 80.20, 80.55 and 80.85



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