Trump retreated on TPP also which in effect diluted both his threats of China trade war and Syria strikes. The equity markets rebounded with Dow closing up 1.2%. In an environment where markets move basis comments from leaders who change their stance frequently, the rational thing to do is to trade basis longer term fundamentals which is still focussed on USD weakness because of its increasing fiscal and trade deficit.
Similarly for India now I would focus on the increasing trade deficit which is aggravated with Brent trading above 71 now and experts talking about it heading towards 80. This would increase the pressure on domestic bonds and consequently would affect INR adversely. USDINR 1m NDF is trading slightly right although bulk of the pressure has come for onshore buying in the last couple of days. EM currencies have depreciated since yesterday evening while equity markets in Asia are mixed. Positional longs should aim at a stop below 65.08 only. CMP 65.27, Range 65.22-65.44.
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