In terms of religious sects, Qatar has the same state
sponsored brand of Islam as that of Saudi Arabia making them historical allies.
But on the other hand the world’s largest gas fields are shared by Qatar and
Iran (the pipelines for which are potentially the cause of the unrest in
Syria). This co linkage with Iran makes it difficult for Qatar, to take an
outright anti Iran stand (diplomatically) which is what Saudi Arabia desires.
Trump singling out Iran as a source of terrorism shows that US is looking for a
new front in Middle east and the steps against Qatar are perhaps the start of
another US led conflict.
UK elections (results on Friday early morning India time)
seems like going in favour of Teresa May and could lead to a moderate uptick in
GBP. James Comey testifies in the Memo Gate crisis on Thursday which has the
potential to create a political storm in the US and could lead to weaker USD
against G7 and a significant risk off situation. Weaker US data coupled with
these developments could create a bear rally in USD index. USD index closing
below 96.3 on weekly basis can lead to another 2% kind of move.
Debt inflows continue to be strong as the economy slowed
down with lower inflation numbers. Tomorrow RBI is expected to stay on hold as
changing their stance to accommodative from neutral would take time. USDINR 1m
NDF is trading 6p left which indicates moderate offshore selling pressure.
Although the view on INR remains constructive but first the Comey-Trump
standoff can result in a risk off taking USDINR towards 64.50-64.70 levels on
Friday. RBI continues to protect further INR appreciation at 64.30 levels. CMP
64.34, Range 64.25-64.40.
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