Although Powell was hawkish but the 10-2 spread on US treasuries continues to be at 63bps which would make me think that either US10Y yields cross 2.95% in follow through today or 90.55 levels on USD index would continue to hold (CMP 90.38). If it were up to short term interest rate expectations then EURUSD should not have crossed 1.10 therefore the longer end of the curve becomes more important for USD projections, which will only go up if the outlook on economy improves even further. Today’s US GDP could prove crucial in this regard while EU inflation would also be watched.
USDINR 1m NDF is trading 7p right now while all EM currencies have depreciated along with the Powell induced dollar strength. Equity markets are in the red. Indian GDP data would come out at 5-30PM only where a print below 6.7% could take USDINR higher towards 65.40. For the day it would follow global trends, CMP 65.12, Range 65.20-64.97.
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