What the FED minutes indicated is that the committee is more confident about growth and gradual rate hike can be expected like 2017. The US Manufacturing ISM at 59.7 shows that US economy is on a healthy expansion path. One could argue that with growth and rate hikes in the pipeline, USD is more likely to gain in 2018 than otherwise. But looking at longer period charts, USD seems to move in tandem with US fiscal deficit. For example during the period 1990-2000 when US fiscal deficit improved, the USD gained. The same relationship can be observed in the periods 2000-2009 and then from 2009-2016. Therefore I would think that the fiscal story and the US desire for a weaker dollar would take precedence over US growth and interest rates as far as currencies are concerned. The other way to look at it is the ongoing pricing of ECB and BOJ policy normalization while market already expects the FED to accelerate normalization.
USDINR 1m NDF is trading 6p left like yesterday. EM currencies have mildly depreciated since yesterday on the back of moderate gains on the dollar. Asian equities are mixed while Nifty is trading flat. India bond yields registered significant down move of 10 bps yesterday. The more time USDINR takes to break 63.50 the more convinced markets will become that this is the bottom leading to profit taking on shorts. CMP 63.51, Range 63.45-63.64.
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