Dollar index continues to trade in the broader range 90.5-89.5. US administration continues to talk in the range of President wanting more tariffs and the others suggesting that talks will help calm down trade tensions. Euro zone retails sales disappointed again this month driving Euro lower from 1.2282, the mild negative surprises in EU data recently should ensure that the recent ranges in the currencies would continue for some more time. Today we have the NFP where we already know that the labour market in the US is robust, only a surprise reading in the headline number or average hourly earnings will move the market significantly.
RBI was more dovish than expected yesterday. Now the market focuses on the possibility that RBI will increase the FPI limit investment for bond markets within the next few days. On Wednesday a news report said that the government has given its recommendations and now RBI will take a decision within a week’s time. Our bond trader is of the view that inflation print this time is going to shoot below 4% and both these expectations will keep bonds well bid and INR strong till the 12th April CPI release.
The morning news of Trump asking for more tariff on Chinese products spoilt the risk sentiments in Asia. USDINR 1m NDF is trading 2p left showing mild offshore selling pressure. EM currencies have depreciated sine yesterday and consequently USDINR has moved higher by 20p since its offshore lows of 64.80 levels. In the second half of April we could see USDINR moving higher than 65.50 but for now we can expect the range to continue, 64.85-65.20. For the day CMP 65.03, Range 65.09-64.92.
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