The passing of the budget resolution in the US along with hawkish comments from FED speakers drove US yield higher along with USD index. Expectations of Warsh being nominated as the new FED chair is taken as a hawkish development. The political capital of Teresa May deteriorated driving GBPUSD lower.
Today we have the NFP wherein expectations have already been lowered to 50k-100k because of the hurricanes. Other US data suggests that there could be positive surprise as against consensus levels. On the other hand the consensus for wage growth print is at 0.3% mainly on account of base effect. Given the lower forecast for headline number, market has already positioned for dollar strength and post the number we could see some amount of retracement.
Asian equities are trading in the green on account of all time highs on the Dow. USDINR 1m NDF is trading 1p right like yesterday. Non Asia EM currencies depreciated yesterday night on account of dollar strength while Asians are more stable today. Positive announcements are expected from the Central government which could take USIDNR lower. Corporate bond investments of an average Rs.1k crores is seen every day and another Rs.9k crores of limits are left in this category. FPIs continue to pull out money from equities which are more than matched by DIIs. In the next 1 week there are a couple of IPOs which should result in inflows. The upside for USDINR looks limited for the next 1 week and therefore I would expect a range of 65.35-64.90 for this period, in spite of dollar strength. CMP 65.28, Range 65.33-65.10.
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