On Friday US retail sales and CPI both disappointed, adding
to the lower UST yield view in the short term. North Korea tested a missile and
it failed to go beyond 4-5 secs which should reduce the concerns of a military
standoff. US vice president is in South Korea and US has not issued a directive
to its citizens to leave S Korea as of now, which should indicate that immediately
the chances of a war is low. USDJPY continued to move lower on the back of
lower UST yields and moderate risk off. US vice president is in Japan tomorrow
to start the first economic dialogue between the 2 nations since Trump came to
power. On Friday treasury report on foreign exchange said that JPY is 20%
weaker than its long run average. This along with the North Korean effort by
the USA should keep USDJPY in a down trend with first target of 107.
USDKRW should continue to drive USDINR in the short term.
Debt inflows continue to flow in with Friday recording 3700 crs. USDINR 1m NDF
is trading left by 7p. Indian equity markets are looking weak in the short term
although the uptrend is still intact. Since morning we have seen custodian
banks selling along with nationalized banks. For the week I would think USDINR
should trade in a range of 64.60-64.25. For the day, CMP 64.35, Range
64.26-64.50.
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