India GDP growth may decelerate to 7.1% in FY17: CSO

Indian rupee opened at 68.17 after closing the previous session at 67.96 levels. The intra-day range is seen between 67.95-68.30 levels.

Steady payroll growth, wages rebound

US Non-farm payrolls increased by just 156,000 jobs last month, compared with market forecasts of 178,000, the Labor Department said on Friday. But investors focused on average hourly earnings, which increased 10 cents or 0.4 percent. That pushed the year-on-year increase in average hourly earnings to 2.9 percent, the largest increase since June 2009, from 2.5 percent in November.

Stronger Canadian jobs, trade data supported C$

The Canadian dollar pulled back to end barely stronger against its U.S. counterpart on Friday after touching its strongest in more than three weeks following surprisingly strong employment and trade data. It had hit C$1.3177, its strongest level since Dec. 14, in morning trade after Canada's economy unexpectedly added 53,700 jobs in December, and all of them full-time positions, and also posted its first trade surplus since September 2014.

India GDP growth may decelerate to 7.1% in FY17: CSO

India's economic growth is likely to decelerate to 7.1% in 2016-17 from 7.6% in the previous year, the statistics department said on Friday. The growth projection by the Central Statistics Office (CSO) has been released a month before it was due to help the government prepare the budget, which also has been advanced by a month to 1 February.

Bonds

Indian government bonds follow rupee lower as U.S. jobs data strengthens bets of more Fed hikes in 2017, say traders. Benchmark note now at INR104.00, yielding 6.41%, against INR104.16 previous close. USD/INR rises to 68.20 from 67.96 previous close. India cut its GDP growth forecast to 7.1% from 7.0%-7.75% earlier for this fiscal. This could hit the bond as well as currency market. Benchmark yield pegged in 6.37%-6.42% band today.

Outlook

Intraday Trend: The USD/INR pair is likely to quote in the range of 67.95-68.30 levels.

Exporters are advised to book partially long term bookings near 68.25-68.30 levels. (They are suggested to discuss their positions with their respective advisors).

Importers were advised to cover their short term exposure near 67.70-67.80 levels. (They are suggested to discuss their positions with their respective advisors).

Short term range (7-15 days): 67.30-68.45

Medium term range (3-6 months): 66.90 – 70.50

Intraday view on Major Pairs

EURUSD-

The EURUSD pair fell sharply on Friday even after weaker-than-expected non-farm payroll data. US dollar was supported mainly because of increase in average hourly earnings. In absence of major events from US and Europe, the pair is expected to trade in the tight range. The pair is likely to remain under pressure with expected intraday of 1.0460-1.0600 band.

GBPUSD-

On Friday, Sterling fell back against a dollar that was boosted by U.S. labour market data on Friday but still ended the week slightly higher, riding out nerves about the British government's preparations for Brexit talks due to start in March. The GBPUSD extended its losses in early Asia today after stronger momentum in the US dollar. In absence of major economic data from US and UK, the pair is expected to trade in choppy range of 1.2150-1.2320 band.

USDJPY-

The USDJPY pair gained sharply above 116.50 on stronger dollar on US labor data. Today, on observance of Coming-of-age day; the Japanese market will remain shut. Hence, the pair is expected to trade in narrow range of 117-118.20 band.

AUDUSD-

Data released today suggests that Australian building approvals rebounded in November following two months of significant declines. Earlier on Friday, the AUDUSD pair retraced back from daily highs as the greenback strengthened following the release of the US nonfarm payrolls report. Technically, the pair is expected to trade in the range of 0.7240-0.7330 band.

USDCAD-

Canadian dollar hit C$1.3177, its strongest level since Dec. 14, after Canada's economy unexpectedly added 53,700 jobs in December; all of them full-time positions, and also posted its first trade surplus since September 2014. Today, the pair bounced back after strength in the US dollar. Technically, the pair is expected to trade in the range of 1.3215-1.3315 band.

Gold-

Gold prices edged up in a technical rebound on Monday after one-month highs hit last week were undercut by the prospects of more interest rate hikes from the US Federal Reserve. Spot gold is still up nearly 5% from mid-December after touching 10-month lows that sparked higher demand on the physical side. Technically, the prices are expected to trade in the range of $1163-1181 band.

Crude:

Oil prices fell on Monday as increased exports from Iran undermined efforts by other oil producers to curb a global fuel supply overhang and as U.S. drillers increased activity for a 10th straight week. Traders said the lower prices were a result of rising exports from Iran that come just as other members of the Organization of the Petroleum Exporting Countries (OPEC) cut supplies in an effort to end a global glut. Technically, the prices are likely to take resistance near $54.40 levels.

Dollar Index:

On Friday, the dollar rose against its major crosses despite weaker-than-expected payrolls number in December. Data released by the Bureau of labor statistics showed that the economy added 156,000 jobs in December compared to 204,000 jobs in the previous month. Today no major economic data is expected to release from the US and this could keep the volatility low for the greenback.