The focus now will perhaps shift from US-China trade tensions to US-Russia tensions in middle east which could reflect on oil. The fact that Saudi Arabia said that it wants Brent near $80 also drove oil prices higher. Dollar index should continue to trade between 89.5-90.5 (CMP 89.59) as the range will only break lower in a pro risk environment where flight to safety does not help the greenback. Perhaps for another few sessions that environment would not be seen given the Syria situation. Today we have the US CPI and FOMC minutes which can help the USD bounce from the lower end of its range.
USDINR 1m NDF continues to trade slightly left which indicates that the buying pressure is led by onshore demand. EM currencies have depreciated since yesterday with pressure mounting on RUB because of US sanctions. Equity markets in Asia are in the red in spite of the overnight gains in the Dow, mainly because of the Syria situation and rising oil prices. India’s bond sell off since yesterday is also brining bids in USDINR. If the USD index now bounces to 90.5 then USDINR could head higher towards 65.50 levels. For the day, CMP 65.10, Range 65.20-65.05.
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