On Friday markets ignored the strong NFP print because of
the focus on French elections. Yesterday helped by hawkish tone of FED speakers
UST yields went higher bringing in moderate USD strength. The mild concern on
commodities and equities seen yesterday rubbed off on EM currencies (ZAR, BRL,
MXN etc) and drove USDINR higher in the NY session. EURUSD got sold off as
markets were disappointed with the high of 1.1022 post the results and EURO
bulls were perhaps forced to exit longs. USDJPY is trading above 113 on account
of higher US yields.
FPIs continue to pour in money in Indian debt (Rs. 14 bn yesterday)
while equities continue to see mild outflows (Rs. 5bn). USDINR 1m NDF is
trading 4.5 left similar to yesterday. USDINR was bought along with the larger
EM currency basket which I would think fundamentally is very different from
India currently. Today Chinese equities and commodities look stable and
therefore risk sentiments are not so weak in Asia. Yuan is reacting to US
yields and Chinese equities weakness over the last few days. The move in USDINR
is kind of overdone for the day at least. CMP 64.48, Range 64.52 – 64.40.
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