North Korea had delivered the message that it is ready to go to any level to prevent disarmament by doing the nuclear test last weekend and therefore there was only fear this weekend but no real need to do anything more. The vote on UN sanction against NK is due today but we might not hear anything significant on this issue now as all sides realize that the best thing to do is to push the issue under the carpet. Hurricanes in the US receive a lot of attention even as Irma withered down to level 2. Overall the week looks better for risk and equity markets than last week. This is a data light week with Chinese IIP and retail sales on Thursday along with US and Indian inflation as the main pieces of new information that we would receive. The breakout in USD index has happened on Thursday with 200 Week MA breaking convincingly so the view remains of USD weakness.
USDINR 1m NDF is trading 4p left only. CNH has depreciated from Friday’s peaks of 6.45 to 6.519 today along with other EM currencies which have depreciated around 0.5%. There is a retracement in dollar weakness that we are seeing across G10 and EM currencies. RBI continues to buy as I think that 2% of GDP of intervention for CY2017 would already be complete. The medium term view is constructive on INR for 63.50 and lower but today does not look like the day RBI allows INR appreciation. CMP 63.85, Range 63.78-63.96. I would want to carry overnight shorts in USDINR.
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