On Friday US bond markets got sold off driving US10Y yields from 2.31 to 2.4%. In spite of this we saw mild dollar weakness against G7 while the greenback strengthened against most EM currencies. The US tax bill is expected to become law by the end of the year or early next year in a diluted form although that didn’t deter markets to shift money out of US treasuries. I would think a weekly close above 2.43 in US 10 Year can now take the yields towards 2.6% which can result in dollar strength across the board. Fresh political trouble for PM May in the UK can keep the news driven GBP subdued. This week has fresh retail sales and CPI data from across the globe hopefully making it an eventful one.
USDINR 1W NDF trading right by 2p shows outflows getting covered in the offshore market which could be the IPO application money flowing back. On the other hand markets are also chatting about a $1.5bn real estate inflow coming in this week. The pair is making higher highs and higher lows showing signs that markets are positioning for a move towards 65.65 levels. India 10Y yields show increasing signs of fiscal worries which can be alleviated or compounded by the CPI print due to be released at 5-30PM. For the day, CMP 65.27, Range 65.38-65.20.
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