Pramit Brahmbhatt is CEO of Alpari Financial Services (India)
The Rupee continued to appreciate for the second consecutive week. Last Thursday the Government cancelled the bond auction indicating that they are in a state to meet deficit target. India was likely to auction 150 bn Rupee bond, but the government's comfortable cash position, ignited the hopes that Finance Minister P. Chidambaram will be able to control the fiscal deficit within his 4.8% target. The Dollar index traded weak last week as investors focus on the emerging-markets fears faded. Local equities started the week on a weak note as foreign institutional investors were net sellers over the concerns about the Federal Reserve's withdrawal in monetary stimulus and an economic slowdown in China. The Rupee is expected to depreciate in the coming days. The trading range for the USD/INR pair is expected to be within 61.80 to 63.20.
It is recommended to be cautious and Buy USD/INR (Futures) on dips with the appropriate stop loss as overall the rupee is expected to depreciate. Pivot Point for the Pair is at 62.67 and below are the Support and Resistance levels.
Last Thursday the data released by the U.S. showed jobless claims declined for the first time in three weeks, declining 20,000 to 331,000 from a previous revised 351,000 in the period ended February 1.
The readings that came were better than forecasts that referred to 335,000, which added more optimism about the strength of recovery in the labor sector. The Labor Department also announced that U.S. non-farm payrolls grew 180,000 in January following a 74,000 gain in December 2013, signaling further improvements in the labor market. The US Federal Reserve's decision to further reduce its monthly bond-purchase program by $10billion, coupled with strong fourth-quarter US GDP read lost its colour last week and the US Dollar Index is leading to a weekly fall giving away some of its last week’s gain.
US monthly jobs report, popularly known as NFP, has always been the most keenly watched economic announcement from the US. The US Labor Department is scheduled to release its monthly employment report for the month of January. Following a weaker reading of only 74,000 new jobs addition in December against the consensus forecast of 196,000 jobs, this week's jobs report is expected to show a rise of 185,000 new jobs in January. A gain of over 190,000 new jobs would confirm economist’s views that the drastic fall in December was not indicative of a reversal of the recent strength in the US labor market. Meanwhile, the unemployment rate is expected to remain stable at 6.7%.