Comey said a lot of things but markets seem unconcerned so
we can ignore them for the time being but media says that the investigations
into Russian involvement in 2016 elections will gather steam post this testimony,
but that is in the unpredictable future.
When Teresa May announced elections on 18th Apr,
GBP was at 1.2560 and that time she had 330 seats (majority at 326). Results
suggest that she will end up having 320 seats or less this time and therefore
we can see further downside in GBP (but corrected for lower US yields in the
same period) from current levels of 1.2750. One positive for the UK is the big losses
suffered by the Scottish National Party which wanted another independence referendum
for Scotland, as their loss of seats would lower a Scottish independence concern
from the UK.
I would not expect EURUSD to move along with GBPUSD and
therefore EURUSD lows should remain floored near 1.11 levels. Draghi’s mixed to
dovish statements yesterday were discounted and EURUSD could not fall below
1.1180 showing the inherent bullish view market holds for the pair now.
As we near the European session EU and UK stock futures
should set the tone for the day which in my view, could most likely be a risk
off due to the approaching political uncertainty in the UK. USDJPY and GBPUSD
shorts might be initiated if EU or UK stock futures register large losses.
USDINR was offered yesterday on account of a PSU bank QIP
inflow (perhaps) and certainly for another Rs. 3000 cr of debt inflows seen
yesterday. USDINR 1m NDF is only 3.5p left which would make me think that
downside for USDINR is limited along with a possible risk off day once the EU
session starts. I would think that in June because of RBI’s book closing, RBI
would want to intervene heavily and prevent further INR appreciation which we
are witnessing. CMP 64.22, Range 64.15 – 64.40.
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