Daily Forex News: Indian Central Bank, Argentina, USD/CHF, GBP/USD


Indian Central Bank allows international investors

The Reserve Bank of India has granted QFI’s permission to hedge currency risk resulting from their investment in India’s equity and debt markets. Since the global economic crisis Indian equity markets have suffered, the government recently went on a tour to lure in individual investors to boost markets. The RBI made changes to the FII laws by introducing a new law allowing overseas individuals to invest in the Indian markets. The Qualified Foreign Investors (QFI) includes HNW individuals, trusts and companies who are interested to invest and take exposure in India, they can invest up to $1 billion.

argentina-293x220Argentina Extends Forex Controls

Argentina’s government on Monday extended its controversial foreign exchange controls to include a 15% tax on offshore debit-card transactions and online purchases as it tries to limit the outflow of U.S. Dollars, according to the Wall Street Journal. The tax – which can be deducted from personal income and asset taxes -takes effect immediately, the federal tax agency, Afip, said in a resolution.

The measure is virtually identical to a 15% tax that Afip on Saturday started assessing on offshore credit card transactions. The government will force banks to provide detailed information about their clients’ domestic and offshore credit card and debit card transactions in order to enforce the new rules.

USD/CHF trades range before Draghi speech

USD/CHF has continued to trade in a 20 pip range throughout the European session today ahead of the Draghi’s upcoming speech. Mixed Swiss data this morning and a speech by the SNB’s Jordan failed to inspire any significant movement as the pair has remained range bound today. With US market closed for Labor day and the European economic agenda completed for the morning, all focus will be upon Draghi’s speech at 13:30.

Analysts at Dukascopy Bank SA believe that the outlook for the pair is negative and comment that “an accelerated downtrend resistance line and the 100 day SMA did not allow the price to increase any further and terminated the bullish correction last week”. They see targets of 0.9729 and 0.9397 before anticipating a robust recovery.

gbpGBP/USD hovering over 1.5900

The sterling is trading closer to the key resistance level at 1.5900, becoming the best performer against the world’s reserve on Monday, as thin volume dominates the markets on US and Canada Labor Day holiday. I.Spivak, analyst at DailyFX, comments “prices continue to oscillate between support in the 1.5769/84 area, marked by the March 22 low and the 50% Fibonacci retracement, and the 61.8% level at 1.5906.

A break higher targets the 1.60 figure and the 76.4% Fib. at 1.6057”. He also adds that further downside could expose the 1.5638/62 region. GBP/USD is now advancing 0.12% at 1.5891 with the next resistance at 1.5912 (high Aug.23) followed by 1.5918 (Upper Bollinger) then 1.5933 (high May 17) and 1.5997 (high May 16).