US manufacturing and service ISM are both touching 60 and that for now should put to rest any doubt about the robustness of the US economy. While price pressure has eluded the US economy, basis these 2 pieces of information I would bet on a stronger NFP and inflation data in October first half. On the other hand EU retail sales saw a second month of decline from the August peak. Improving US data vs peaking EU data, plus fresh worries on Euro zone politics plus ECB confusion, lends further credibility to expectations of a stronger dollar for the next 1 month.
USDINR 1m NDF is trading 1.5p right. Corporate bond inflows along with IPO flows have led to longs stopping out and USDINR moving to 65 from 65.30 levels. The RBI policy was prudent and independent but it contained nothing to boost the INR or Indian equity markets. India 10Y bond yields are at 6.73% from 6.62% since yesterday pre policy. Since ISM services data yesterday USD has gained mildly against other EM currencies. Risk remains supported in the Asian session today. USDINR upside view remains intact till a daily closing below 64.70 is obtained. CMP 65.15, Range 65.25-65.08.
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