Headline print on the NFP drove a moderate USD correction making it the first USD index gain week in a month. USDJPY failed to sustain above 111 as EURO edges back to 1.18, reinforcing the major trend of dollar weakness. CFTC positioning shows that for the last week EURO longs reduced their positions for the first time in over a month although the market remains significantly Euro long even now. Market still remains significantly JPY short although this was the second week where market reduced its JPY short positions, perhaps indicating a beginning of a trend here which can lead to JPY appreciation. This week US CPI would be the most important data print along with the FED speakers.
On a weekly basis USDINR gave a bearish closing last week with a convincing break of 63.85 support and technically the pair should follow through this week for a new low. USDINR 1m NDF is trading 5.5p left which indicates the dollar strength post the NFP. Asian equities are in the green as commodities rallied in Asia on the back of increasing optimism about China. China FX reserves data is due anytime today. Other EM currencies depreciated sharply post the NFP but have retraced since then. The medium term view for USDINR remains lower towards 63.20. CMP 63.68, Range 63.75-63.55.
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