If markets were believing what Trump says then the Dow would not be at 24000, therefore the risk of an actual trade war was pretty less and after Xi’s positive comments today morning, it becomes clear that China is not going to react in a hurry to Trump’s jibes. With a raid on Trump’s personal lawyer the focus is back on the investigations surround Trump, which could make the President rake up more dirt in an effort get the attention back on things that cannot be. The next big war of words can be with Russia after the chemical attack in Syria. Consequently I think USDJPY is nearing sell levels again, I would cut my short positions if the pair closes above 107 levels on a weekly basis.
USDINR 1m NDF is trading 3p left while EM currencies have appreciated this morning. Asian equities are in moderate green because of Xi’s comments. USDINR has failed to appreciate beyond the 64.85-65.20 range, despite the positive news of RBI increasing limits and today morning’s Xi’s comments. A failure to go below 64.85 by mid day today would give a buy signal for 65.20 again. The currency manipulation report by US treasury is due by end of week. CMP 64.91, Range 64.98-64.85.
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