FTSE, DOW, S&P, NASDAQ all made a new intermediate high. Could India follow suit?Quite possible....We need to wait & watch...
Dollar Index, the much talked about index in the Media these days is getting more than the required attention...Obviously when everybody starts looking at it, the correlation is likely to not work... Markets will change the directions when it has convinced everyone that the opposite it most probable...
Euro (EUR-USD), the currency having the greatest weight in the Dollar index, have a direct correlation with Commodities. Lately Euro has been going sideways, but Gold, Silver & other commodities has shown quite a good strength.Euro was actually in its wave 4 and should soon start its wave 5 depreciating it against dollar.
Pound(GBP-USD), in its wave IV of 3, should soon start it wave V, depreciating against dollar. It could all the way down below 1.35.
Euro against Pound still looks bullish and Euro should appreciate against pound, making new highs.
USD-INR, fell sharply last week, but should hold on here and start its wave 3 upwards, Depreciating against Dollar.
Dollar Index, now finishing its wave 4, should start its upward journey, gaining lot of strength ahead. All in all, Dollar would be the winner appreciating against other curreny which means extreme pressure on Commodities & Equities soon.
Hii Vishal,
ReplyDeleteFrom whatever little Technical analysis I understand you seem to convince me with charts that dollar is likely to strenghten against major currencies including INR.. However u fail to provide a likely timeline within which u expect this move to happen which I think is d crux of this issue....
Though this is a technical blog where Fundamentals views might b crticised but I have some points to make aginst USD-INR fundamentally (cannot comment about other currency as my expertise is limited)
1) Rupee has been appreciating in last few weeks not bcoz Rupee has strengthen agianst dollar but because RBI has allowed Rupee to strenghten... In last 2 month(Jan-Feb) RBI has not bought single dollar or in other words RBI has not intervened in currency market which is very unlikely of them...
The reason I see for these action is soaring high inflation in India. With such high inflation(especially food inflation) it becomes imperative to increase Imports of commodities & food article from diff parts of world. With rupee strengthening against dollars these Imports become cheap therby less Fiscal Deficit & a step closer in acheiving desired deficit targets of Fin Minister.. Less Fiscal deficit in turn attracts more money from FII therby further strenghtening the rupee.. A similar reasoning can also be given for Yuan-Doallar position.
However this cycle cannot continue forever & RBI will at some stage or other will be force to buy dollars & not allow Rupee to strengthen further in benefit of our exporters... Therefore even Fundamentally it is very certain that Rupee will weaken in future. The question is not Whether Dollar will strenghten but the question is "When" ??
If your charts can give me this answer then I would even more appreciate your analysis...