Markets as it is had ignored the threat of North Korea and therefore the positivity around the announcement that North Korea is ready to talk denuclearization was short lived. Gary Cohn’s resignation made markets think that Trump is more serious about import tariffs and/or pulling out of Nafta than what markets assumed yesterday morning. There is also chatter that Trump is preparing further tariffs on Chinese imports. Cohn’s resignation also puts into doubt the rollout of Trump’s infrastructure plan which was one of the causes for the recent recovery in equity markets. This has led to Dow futures trading 1.5% in the negative today morning. Protectionism rhetoric should continue to push USD lower against other G7 currencies.
USDINR 1m NDF is trading 1p right as compared to 4p yesterday. KRW appreciated along with most other EM currencies after the North Korea news and then the dollar weakness. Although Dow futures is down 1.5% and Nifty is looking like it can head into a digit lesser, INR should follow currency markets and upticks in USDINR should be sold. CMP 64.96, Range 65..05-64.80.
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