Trump’s surprised everyone by being far less dramatic and
controlled. The stock market rally since the last 15 days was based on Trump’s
tax cut expectations, infra spending plans and expectations of
repealing/softening Dodd Frank regulations. Trump did not mention Dodd Frank in
his speech while he touched upon the 1 trillion USD (which was expected) infra
spending plans, which the market will take with a pinch of salt until there is
clarity on the US debt ceiling issue. Therefore Trump’s speech if anything
should have a short term negative impact on equities and largely prove to be
inconsequential. Dollar index at current levels of 101.55 looks toppish to me
as I continue to expect a fall in rate hike probabilities over the next 1 week
(currently March chances are at 52%).
India’s stellar GDP data was ignored by offshore Nifty as it
was released which should be conclusive about the relevance of the print. Empirically
it seems that the market doesn’t react to any of India’s regular data releases
except CPI and WPI.
USDINR 1m NDF spread has contracted to around 4p left from 7p
yesterday which could lead to some on shore buying today. KRW has depreciated
since yesterday along with CNH. India 10 Y yields registered an uptick as US
yields moved higher. Market chatter suggests Nats bought today at open. Today
could be a mild negative day for INR which could be used to create fresh USDINR
shorts. CMP 66.81, Range 66.95-66.74.
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