Continuous white house restructuring and the joint comments (from Nato members) against Russia (on the nerve gas incident) are perhaps keeping the markets slightly short of confidence even though US data came in positive. Kuroda was reinstated as BOJ governor for 5 years which ensures that the yield curve control stays in place and therefore gradual Yen appreciation should continue. Market ascribed the strong dollar comments as the reason behind the bounce in dollar index, but I would think it is the range rather than any specific reason.
India’s trade deficit came in better than expected at $12bn to which INR did not react by much. 1m NDF-onshore spread indicates slight buying pressure at 1p. Participants are slightly short USDINR in spite of negative local sentiments because of expectations of inflows from ongoing/linedup IPOs of Rs. 13,000 crs and certain other debt drawdowns of around $650 mn. This will continue to ensure than 65.05 is protected in the short term while a couple of hours of trading below 64.85 can take us to 64.64. The next substantial up move in USDINR could come in April 2018 only as seasonality stops supporting INR. For the day, CMP 64.92, Range 64.80-64.98.
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