DAILY FOREX TECHNICAL ANALYSIS REPORT

GBPUSD

The GBP/USD pair which was initially falling on Tuesday found enough support at 1.50 level to turn the things around and formed a rather positive hammer in the end. What remains to be seen is the direction it takes from here. We are currently holding no hopes of spikes rather are focusing our time on identifying selling opportunities. In our opinion, a breakdown below Tuesdays candle can also be a selling opportunity.

EURUSD

The EUR/USD pair went a notch higher on Tuesday, shooting through the hammer candle formed on the previous day. Although the sky seems to be clear but we do see a storm coming. In other words, we are going to sit this one out. 1.10 level above is going to be our flag off level. On the flip side, if we break the bottom of the hammer on Monday, we might think about entering a short position. After 1.10 level, we might set our eyes on 1.14 level, but that depends on crossing the 1.10 level first.

AUDUSD

The AUD/USD pair formed a candle possessing hammer like characteristics following an encounter with a support level that allowed it to take a U-turn. Any break above the hammer is a bullish signal and indicates an upward momentum. However, in the opposite direction it might move to 0.71 level. Australian Unemployment data would be among the figures released that would be having an impact on this pair.

USDJPY

The USD/JPY pair took a bounce on Tuesday. However, we still haven't escaped the previous consolidation area; hence we are not sure how long this bounce will go in upward direction. The markets as always are in full oscillations, hence we are looking for some decent pull back that might give a significant profit. Apart from this, there is resistance zone extending from 124 level to 125 level.

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Reserve Bank of India maintains repo rate at 6.75%, CRR at 4%

The Reserve Bank of India (RBI), in its fifth Bi-monthly Monetary Policy Statement for 2015-16, has decided to keep the repo rate same, with no pulls or pressure from the market. Governor Raghuram Rajan declared that the Repo Rate will be maintained at 6.75%, with CRR at 4%. Reverse Repo Rate is held at 5.75%.

RBI in an official statement said, "Since the fourth bi-monthly statement of September 2015, global growth continues to be weak. Global trade has slowed further with waning demand and oversupply in several primary commodities and industrial materials. In the United States, inventory accumulation is likely to hold down growth in Q4 of 2015. Industrial production slumped in October on cutbacks in oil drilling, while exports were undermined by the strengthening US dollar. Consumer confidence was, however, supported by the diminishing slack in the labour market. In the Euro area, high frequency indicators such as retail sales, purchasing managers’ indices and unemployment point to an uptick in a still anaemic recovery, with monetary policy expected to be increasingly supportive as risks of undershooting the inflation target persist. In China, slowing nominal GDP growth and high debt continue to raise concerns, especially given the overcapacity in certain sectors. Other emerging market economies (EMEs) continue to face headwinds from domestic structural constraints, shrinking trade volumes and depressed commodity prices."

It added, "The Reserve Bank assessed that the inflation target for January 2016 at 6 per cent was within reach. Accordingly, it front-loaded its policy action in response to weak domestic and global demand that were holding back investment, while noting that structural reforms and productivity improvements would continue to provide the main impetus for sustainable growth."

The Indian central bank has cut policy rates by a cumulative 125 basis points this calendar year, and surprised markets and analysts with a sharp 50 basis points rate cut in the last rate review.

India’s central bank has managed to tame inflation down to manageable levels and the price gauge has remained within its comfort zone for several months now. In fact, wholesale price inflation has consistently been in the deflationary territory. Retail inflation saw an uptick to 5 per cent in October, which was a four-month high, rising from 4.41 per cent in September. That did raised a few eyebrows as did the reports about a drop in rabi crop output and a sharp rise in the prices of pulses, which are likely to put pressure on food price inflation. Yet, the comforting factor is that the retail inflation number remains below RBI's January 2016 target of 6 per cent.

The Reserve Bank will shortly finalise the methodology for determining the base rate based on the marginal cost of funds, which all banks will move to. The Government is examining linking small savings interest rates to market interest rates. These moves should further help transmission of policy rates into lending rates. In addition, the on-going clean-up of bank balance sheets will help create room for fresh lending. The Reserve Bank will use the space for further accommodation, when available, while keeping the economy anchored to the projected disinflation path that should take inflation down to 5 per cent by March 2017.

The sixth bi-monthly monetary policy statement will be announced on Tuesday, February 2, 2016.