Dow is showing signs of exhaustion and a break below 25970 can create a quick and small correction. USD index remains sideways although the downward momentum has abated for now. US yields have crossed 2.7% and a weekly close above the same can bring in 3%. Trump plans to give details of his USD 1.5tr infrastructure spending plan in mid February which can push the yields higher. Higher yields for now are not helping the dollar or scaring the equities. The dollar can start gaining with a higher yield if it is accompanied by steepening of the 10-2 year spread as well. Meanwhile I expect the USD index to correct towards 90 levels.
USDINR 1m NDF is now trading 2p right as against nearly flat yesterday and 2p left the day before. Nifty is trading flat against the overnight losses in US equities. The markets await the budget tomorrow while the global risk environment is not immediately conducive to risk. EM currencies are flat since yesterday. CMP 63.72, Range 63.65-63.85.
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