US GDP and personal consumption came in better than expected
leading to dollar strength. US data continues to surprise on the upside,
countering expectations of dollar weakness. Chinese PMI data came in mildly
better than expectations but failed to lift AUD against dollar strength.
Next week Trump meets the Chinese President which might keep
Yuan depreciation capped and could lead to moderate Yuan appreciation,
resulting in moderate INR appreciation. Nationalized banks seem to have allowed
INR appreciation today beyond 64.90 and perhaps the mandate today is to allow
the currency to swing with flows. Historically 31st March sees INR
appreciation on the back of last minute inflows and disbursements. To
reiterate, I would think that the bottom for USDINR is somewhere near 64.75
while today or next week a break below that can lead to further 20p
appreciation of INR. Next week’s appreciation could be caused by Yuan strength
otherwise the drying up of inflows in April could start an upward journey in
USDINR. For the day, CMP 64.81, Range 64.75-64.89. Possibility of a break lower
today.
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