Today Carney is expected to be dovish given his recent comments. GBPUSD if it closes the week above 1.3550, then the pair could be in for a sharp up move and vice versa. US CPI today could surprise on the higher side (consensus 0.3% mom) given the increasing pressure on the labour market which could take the dollar index higher with Euro expected to be the primary loser in G10 in case of further dollar strength.
USDINR 1m NDF is trading 7p right as compared to 8p yesterday. EM currencies have mildly appreciated since yesterday along with dollar index’s mild cool off. Equity market have registered gains (against what I expected) overnight. FPI flows continue to be substantially in the negative while India 10y is back at 7.75%. Medium term outlook of INR remains that of depreciation towards 68 but today might not be the day it breaches 67.50. CMP 67.39, Range 67.50-67.25.
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