In the US the setup is of higher equities and lower volatility with a flatter yield curve, indicating a comfortable environment with most good news priced in. This is helping commodities edge higher even though geopolitical risks in Middles east continues to rise gradually. Yesterday Euro zone retail sales surprised on the higher side along with news of 3 ECB members wanting more hawkish taper on the 26th Oct meeting, this failed to push EURO higher substantially, indicating that USD bulls are in control of the pair currently and therefore I would target 1.1510/1.1475.
Looking at the price action yesterday it seems that the outflow of the telecom stake sale is behind us. USDINR 1m NDF is trading 2 p right while EM currencies have mildly appreciated since yesterday evening. There are a few large inflows that might hit the markets now which include a real estate company selling stake worth Rs. 9600 cr, a private bank raising capital to the tune of $1bn and IPO inflows. All this would make me think that we can see INR appreciation when most people were expecting USDINR to break higher today. CMP 65.10, Range 65.20-64.90.
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