The selloff in oil and commodities has abated and equity markets
have sustained at the highs. The scare higher US yields were having on EM
assets doesn’t seem to be worrying the markets anymore. With so much of
landscape there can never be a time without any geo political risks but other
than that most risks seems to be factored in and the rally in risk assets could
gain momentum again. Today we have retail sales and CPI in the US which would
be could be critical to ascertain US growth trajectory, given the fact that
consumer spending has been the biggest concern in Q1 and a rebound there could
bring cheer to the Dow.
Markets are talking about Masala bond and QIP inflows and
expecting USDINR to move lower. USDINR 1m NDF is trading 3.5p left which is not
reflective of such inflow expectations. Other EM currencies have appreciated significantly
over the last 2 days along with INR. Asian equity markets are flat to mildly
negative. FPI inflows into debt continues while equities flows remain dependent
on large issues or one offs. I would like to maintain overnight shorts in
USDINR. CMP 64.30, Range 64.15-64.40.
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