The 10-2 year US treasury yield spread made a new low at 45 bps which should bring in further dollar weakness. Equity markets perhaps shifted their focus to earnings rather than Syria but twitter remains more important than Bloomberg for short term trades. Trump saying that Russia and China are devaluing their currency is implying that he would rather have a weaker USD. GBP outperformance continued on the back of seasonality and USD weakness. GBPUSD has not given a weekly close above 1.4262 (76.4% retracement of the pre Brexit high of 1.5010 to post low of 1.1841) and a weekly close above this level now would call for 1.5010 over the next 6 months. USDJPY continues to hang above 107 and with the current dollar weakness and ignored geopolitical tensions, I would look to sell the pair with stop above 107.70.
USDINR 1m NDF has moved significantly right to 4p indicating offshore buying pressure. In spite of dollar weakness, EM currency strength and flat to mildly positively equities USDINR has been bought today morning. A couple of hours trading above 65.55 would give fresh longs the courage to enter driving the price higher immediately towards 65.80 levels, but not sure if that happens today. One could perhaps watch India 10Y yields to ascertain the path of USDINR during the day. CMP 65.53, Range 65.55-65.45.
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