Monday, 23 April 2012

Guest Commentary: Gold & Silver Weekly Outlook for April 23-27 | DailyFX

Last week's slow paced movement of bullion might change direction in the upcoming week as the FOMC meeting will be held on Wednesday and may sharply affect the direction of bullion. Here is a short overview and an outlook for the week of April 23rd to 27th; in this analysis I use fundamental analysis to examine how the upcoming events, decisions and financial reports may affect the direction of gold and consequently also SPDR Gold Trust (GLD).
Gold moderately declined during last week by 1.05%. Silver slightly rose on a weekly scale by 1.05%.
Furthermore, during last week the GLD gold etf also edged down by 0.82% and reached on April 20th 159.54.
During last week the U.S jobless claims slightly declined (week over week); this news didn't seem to have much effect on the forex or commodities markets. The housing market in the U.S continued to show signs of slow recovery at best. Finally the U.S Philly Fed had grown by a slightly slower pace than a month earlier. This disappointing news may have adversely affected the U.S dollar.
The video link on gold and silver prices provides a broad outlook for the major news and events that might affect the direction of metals during the week of April 23rd to 27th; the video includes reviewing the main reports, events, decisions and news items to be published during the upcoming week. Some of these reports and events include:
Tuesday – U.S Consumer Confidence: according to the previous report, the consumer confidence index decreased in March (M-o-M). The current expectations are that the April index may change direction and edge up; this report might affect commodities market;
Wednesday – ECB President Draghi Speaks: Following the April ECB rate decision in which the rate wasn't changed at 1% Mario Draghi will speak and may refer to ECB's plan to calm the markets including implementing LTRO 3 or resuming the SMP. His speech may influence the direction of the Euro/USD;
Wednesday – U.S Core Durable Goods: This monthly update will examine the developments in U.S. orders of durable goods in the manufacturing sector during March 2012. According to a estimate for February 2012, new orders of manufactured durable goods increased by $4.5 billion to $211.8 billion; if this report will continue to be positive then it may strengthen the US dollar;
Wednesday – FOMC Meeting (Statement): The FOMC will convene for the third time this year; I think the FOMC won't decide on another stimulus plan, especially since the U.S's economic progress is still moving up (e.g. the U.S labor market and U.S GDP are still growing); I speculate that if there won't be another call for a stimulus plan or there won't be a hint in the statement for it in the near future, bullion are likely to sharply fall;
Friday – First U.S GDP 1Q 2012 Estimate: This will be the first estimate of U.S's first quarter 2012 real GDP growth. In the 4Q2011 the GDP growth rate reached 3%. The current expectations are that the growth rate in the first quarter will be similar to the fourth quarter of 2012 (for the final estimate of 4Q GDP).
Source : Dailyfx.com 

Sunday, 22 April 2012

Rupee may depreciate to 53 levels on macro factors: India Forex



The rupee rose to the 52.20 levels - a new three-month low against the dollar on Friday - its weakest since 10 January 2012. It has depreciated almost 1.5% against the greenback this week too from the last week's closing of the 51.30 levels.

The Reserve Bank of India (RBI) surprised markets last week by cutting its repo rates by 50 bps, as against the market expectation of 25 bps.

The scope for a further interest rate cut had decreased since the governor stated an upside risk of inflation, which made the markets tremble.

The RBI releases data on intervention with a lag of nearly two months and the latest one on Monday showed that the bank had bought $1.1 billion and sold $1.4 billion in the spot market in February. Forex reserves with RBI slipped below $300 billion to $293 billion from 30 December 2011, reducing the central bank's strength to intervene in the forex market.

In spite of the recent RBI intervention, the rupee is consistently depreciating on account of domestic factors, such as current account deficit, inflation, liquidity issues, higher interest rates, a slowing economy, which continue to put pressure on the rupee.

The trade gap has hit a record $185 billion for 2011-12, according to data released on Thursday and the current account deficit is likely to stand at 4% of GDP in the last financial year.

An intervention will not help as we still see heavy import demand. Oil prices continue to stay above $100 a barrel, being a net importer of crude. The rising prices and the huge dollar demand from oil players are keeping the rupee under pressure.

Given the huge shortage of dollars in the forex market, since everyone is diving into it as a safe haven, expect the rupee to face relentless pressure.

The government's inability to lift the economy or introduce any reform to support it makes investors cautious about the growth outlook for the nation.

Overall, the outlook remains negative for the rupee which may hit Rs 53 to the dollar soon. It had touched a record low of 54.30 in mid-December 2011.

"There are no great limits to growth because there are no limits of human intelligence, imagination, and wonder," Ronald Reagan said. Unfortunately, we are seeing a lack of government intelligence to move the economy to sustainable levels.

As mentioned above, macroeconomic factors are weighing on the rupee. The growing dependence on FIIs and FDI are making the long-term growth prospect of the economy very bleak.

Investors could be attracted on the back of some positive reforms and a decent growth prospect, which are seen lacking, to lure them.

The International Monetary Fund (IMF) has pegged growth in India's GDP for 2012 at 6.9%, scaling down the forecast by 0.1 percentage points from its projection in January.

It attributed the moderating growth outlook to policy uncertainty, supply bottlenecks, high interest rates and low external demand. On the external front, spillovers from Europe reflected in the slowing exports and the slowing world economy. This is escalating the poor sentiment in India.

The government, on Friday approved 22 foreign direct investment (FDI) proposals amounting to Rs 586.137 crore ($112.5 million). FIIs invested more than Rs 445 billion in the equity market this year.

In April 2012, we have seen Rs 1,376.20 crore inflows in the debt market and outflows of Rs. 749.40 crore in equity.

Looking at the deficit of $185 billion, we need a minimum $15 billion to meet our requirements. The state of FIIs has been very volatile, making stocks hit 16,000 again and the rupee hit new lows against the dollar possibly.

By Abhishek Goenka, CEO, India Forex India Pvt. Ltd . Source : The Economic Times 

Market likely to be choppy with upward bias: Experts

Trading in stock markets is expected to be volatile this week as investors are likely to take cues from corporate earnings, analysts said.
The future & options derivative contracts expiry on Thursday will also keep markets choppy, they added.
Country's most valued company RIL had already posted 21% dip in fourth quarter earnings which was reported after the close of trading hours on Friday.
"RIL results for the fourth quarter have been in line of the estimates. While most of the parameters have been in line of the estimates, there is definite positive surprise on the GRM (Gross Refining Margins). That's definitely positive during this quarter," Jagannadham Thunuguntla Strategist & Head of Research SMC Global said.
"...Once the earnings season gets over market may find some direction. Besides, RIL's stock will not be affected much on Monday as the results were on the expected line," Ashika Stock Brokers Research Head Paras Bothra said.
Among the blue-chips, TCS, Wipro, Maruti Suzuki and ICICI Bank will announce their quarterly results this week.
"The outlook for the equity markets looks positive. RIL should bounce back after initial knee-jerk reaction in its stock on Monday," CNI Research CMD Kishore Ostwal said.
According to Bonanza Portfolio Research Analyst Shanu Goel, "Apart from the domestic events, global cues too will continue to influence the market trend...."
The BSE benchmark Sensex recorded a weekly gain of 1.63% after the Reserve Bank of India (RBI) cut repo rate by a sharper-than-expected 50 basis points in its annual monetary policy for 2012-13 on Tuesday.

Published on Sun, Apr 22, 2012 at 12:36 |  Source : PTI
Updated at Sun, Apr 22, 2012 at 20:25 

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