Major Forex News
India Rupee Sinks to Record Low, Bonds Drop on Fed Taper Concern
India’s rupee plunged to a record low on speculation a strengthening U.S. economy will prompt the Federal Reserve to pare its $85 billion of monthly bond purchases as soon as next month. Government bonds declined.
The Bloomberg Dollar Index climbed 0.5 percent last week as data showed U.S. jobless claims decreased to their lowest level since 2007 and retail sales rose for a fourth month in July. The Fed may taper its stimulus in September by $10 billion, according to the median estimate of economists in a survey concluded last week. The central bank will release minutes of its July 30-31 meeting on Aug. 21.
The rupee slid as much as 1.3 percent today to an unprecedented 62.4600 per dollar and traded at 62.3138 at 10:00 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. It weakened 1.3 percent last week.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, surged 69 basis points, or 0.69 percentage point, to 13.41 percent, data compiled by Bloomberg show.
The yield on the 7.16 percent government bonds due May 2023 rose six basis points to 8.96 percent, according to prices from the central bank’s trading system. The rate, which surged 77 basis points last week, is at the highest level for a benchmark 10-year Indian bond since August 2008.
Global funds have cut holdings of Indian debt by $9.8 billion since May 22 when Fed Chairman Ben S. Bernanke first signaled the U.S. may reduce bond purchases this year. Primary dealers had to buy 14.44 billion rupees of the 160 billion rupees of debt offered to local investors on Aug. 16, the fourth failure among five weekly auctions since July 19, RBI data show
COMMODITIES VIEW
Market News
Gold Corrected as Prices Reach Two-Month High
Market participants cut bullish and bearish bets on gold simultaneously for the first time in two months as prices advanced to the highest since mid-June on signs of strengthening physical demand.
The net-bullish position rose 18 percent to 56,604 futures and options by Aug. 13, as the 17 percent contraction in short bets exceeded the 3 percent drop in long wagers, U.S. Commodity Futures Trading Commission data show. Net-long holdings across 18 U.S.-traded commodities expanded 23 percent as the position in silver more than doubled and investors turned positive on copper for the first time since February. Gold tumbled a record 23 percent last quarter as some investors lost faith in the metal as a store of value. rice’s jumped 4.5 percent to $1,371 an ounce on the Comex in New York last week, the biggest gain since July 12.
Crude Falls First Time in Seven Days as Storm Concern
Crude dropped for the first time in seven days as the threat of a storm in the Gulf of Mexico dissipated, removing a risk to oil and gas production in the area.
Futures fell as much as 0.8 percent after the National Hurricane Center in Miami there was no tropical cyclone activity in the Atlantic basin. Some offshore energy rigs and platforms evacuated non-essential personnel last week as a storm precaution. Oil also slid because demand from U.S. refineries is declining as the peak gasoline-use period comes to an end. WTI capped the longest rising streak since April on Aug. 16 on unrest in Egypt.
Worries about a storm in the Gulf, which helped boost prices late last week, a New York hedge fund that focuses on energy. Already seen a downtick in refinery utilization and should see further declines in the weeks ahead and we enter the fall maintenance season.
Copper Falls Most in Three Weeks on Fed Stimulus Bets
Copper futures posted the biggest drop in almost three weeks as concern that the Federal Reserve will scale back U.S. monetary stimulus clouded prospects for metal demand.
Minutes of July’s Fed policy meeting, due on Aug. 21, may give details of deliberations on reducing bond purchases that were intended to boost the U.S. economy. The central bank probably will reduce fiscal stimulus next month, according to 65 percent of economists. The U.S. is the world’s second-biggest copper consumer. Copper futures for December delivery slumped 0.9 percent to settle at $3.336 a pound at 1:15 p.m. on the Comex in New York, the biggest drop for a most-active contract since July 30. On Aug. 16, the price reached $3.3835, the highest since June 5.
Buy CRUDE Around 6800.00 TGT 6900.00 SL 6740.00
