Trump was severely criticised by another senior republican, Corker. The altercation brings forth concerns about Trump’s support and therefore the ability of his tax cuts to go through without revenue neutrality. Which in turn puts into question a substantial run up in yields and USD. Therefore while we expect a mildly stronger dollar over the next 2-3 months, the reversal could be surprisingly fast. Meanwhile today Catalonia can announce independence which would create some political uncertainty for Euro driving it lower.
USDINR 1m NDF is trading 4p right which should prevent accelerated INR appreciation despite CNH and KRW appreciating overnight. IN10Y yield is at 6.77 while the high has been 6.78 therefore there doesn’t seem to be any abatement in India fiscal concerns and therefore a reversal is not in sight. Oct Range 65 – 65.70 or higher. Day, CMP 65.26, Range 65.17-65.33.
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