Reports seem to suggest that Trump’s budget blueprint
released yesterday is politically very ambitious and therefore impractical.
Mnuchin expects the tax reforms to pass in 2017 but not by August 2017
indicating further delay in Market’s expectation from Trump. New Home sales and
Manufacturing index yesterday surprised on the downside. Harker who had
previous been hawkish showed signs of change when he said that another surprise
on inflation on the downside would worry him a little. Today we have the FOMC
minutes which would drive markets shedding light on FEDs discussions regarding
balance sheet unwinding. A weekly close on dollar index below 96.5 would start
a new downtrend and otherwise a bounce could be expected.
USDINR got bought yesterday on the news of India-Pakistan
border skirmish where we can see follow up developments as both countries take
turns to deliver an aggressive reply. EM currencies have mildly depreciated
since yesterday while equity markets are in the green. We continue to see bids
in USDINR from various quarters. We can expect RBI to intervene above 65
levels. I would continue to remain overnight long for a move to 65.25 in May.
CMP 64.95, Range 65.02-64.85.
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