Forex - Dollar firms on Federal Reserve hints of no policy changes

The dollar firmed in Asian trading Wednesday after the Federal Reserve dismissed the possibility of fresh monetary easing, which would have weakened the dollar with the aim of injecting liquidity into the financial system to pump up the economy.

Meanwhile, reports out of Germany that Chancellor Angela Merkel's government opposes strengthening a bailout fund fueled the flight to the safe and liquid greenback as well.

In 2012, a EUR500 billion European Stability Mechanism will become operational yet fears have persisted that while it may be big enough to assist countries like Greece, it won't be large enough to prop up Greece alongside bigger eurozone nations such as Italy and Spain.

Talk that Germany, one of the fund's key contributors, opposes beefing it up fueled fresh fears that the euro may be in trouble.

Furthermore, the Federal Reserve didn't rule out the possibility of snapping up assets such as Treasury bills or mortgage-backed securities from banks, known as quantitative easing, in its quarterly monetary policy statement on Tuesday.

Markets, however, interpreted the language to mean that such a move wouldn't come until well into 2012 if it does comes at all.

IEA trims oil demand views on weak economic data

LONDON (MarketWatch) -- The International Energy Agency said on Tuesday that it has lowered its forecasts for global oil demand for 2011 and 2012 by 160,000 barrels a day and 200,000 barrels a day, respectively, due to the "more precarious economic backdrop" and weaker fourth-quarter data. "Uncertain prospects for the single European currency continue to provide added downside risk to current economic growth estimates," the IEA said in its monthly oil report. The agency now expects global oil demand to average 89.0 million barrels a day in 2011 and 90.3 million barrels a day in 2012.

China gets fresh chance to float the yuan

Economic gloom is deepening in China and abroad, forcing extraordinary measures. Responding to the euro zone’s debt crisis, for example, six central banks led by the U.S. Federal Reserve recently lowered the cost of emergency U.S. dollar funding for European banks. And at home, the People’s Bank of China cut the reserve requirement ratio for commercial lenders by 0.5 percentage points.

Rupee Overview 13th Dec

Buy @ 53.3 stop @ 53 tgt 53.55 - 53.8 intrday

Trading and sustain above 53 will bring to 53.9 - 54.4 - 55 in near term, where we are buying from 51.5 level and expect to halt at 55 around. CMP is 53.5 and hold long advise

USD/INR: Rupee yesterday which open at the level of 52.25 per$ failed to trade below 52.2 and traded side way to upsdei for the day and breached the higher resistance of 52.8 and closing was seen above 53 per$ which was the near term highe on closing basis. Today opening is seen positive around 53.2per$ where it failed to cross the lower level of 53 per$ and is trading at 53.36$ nearing the resistance of 53.4per$. If sustain trading is seen above 53.4 will bring to higher level of 53.8per$ to 54.5 per$ which will be just the extension target of the rise what we have been seen in past days. Where on lower side it’s not expected to trade below 52.8 per$ on closing basis and any dip will be buying opportunity where on higher side if sustain trading above 53.4per$ will spark the higher target of 53.8 per$ to 54.5 per$ in near term. Stochastic has reverted from the lower zone with positive intersection and is trading at 60% zone with positive intersection where buying can be seen in near term.

Statue and Italian Flag in front of Vittorio Emanuele monument.

Rome paid slightly less than 6% to sell 7 billion euros of one-year bills on Monday as appetite for short-term maturities, especially from retail investors, helped offset market pressure on Italian debt after last week's European Union summit.

Statue and Italian Flag in front of Vittorio Emanuele monument.

At 5.952%, the one-year yield was just below a euro lifetime record high of 6.087% hit at a mid-November sale.

In a bid to support key domestic demand for its debt, Italy held a so-called "BOT day" on Monday, with banks scrapping fees for retail investors who bought the bills at auction.

Demand for the bills totalled around 13.5 billion euros.

Rupee Over View 12 Dec. 11

USDINR Buy @ 52.3 Stop @ 52.15 tgt 52.5 - 52.7 per$..

Rupee on Friday closing was seen around the level of 52.25 per$ and on lower side low was tested at 52.18 per$, on higher side it has tested the level of 52.55per$ but failed to hold higher ground and correction was seen. Today opening is seen flat around 52.25per$ where it failed to cross the lower level of 52.15 per$ and is trading at 52.34per$ nearing the resistance of 52.4per$. If sustain trading is seen above 52.4 will bring to higher level of 52.8per$ to 53.26per$ which will be just the retracement of the rise what we have been seen in past days. Where on lower side it’s not expected to trade below 52.16 per$ on closing basis and any dip will be buying opportunity where on higher side if sustain trading above 52.5 will spark the higher target of 52.8 per$ to 53.5 per$ in near term. Stochastic has reverted from the lower zone with positive intersection and is trading at 60% zone with positive intersection where buying can be seen in near term.

Trading Call in Nifty 12th Dec 2011

Rajeev: Nifty Sell @ 4895 TGT 4875 4855 4835 Stop Loss 4815 CMP 4895 12/12/2011 9:23