Reports of Trump considering selling emergency oil reserves to tame oil prices plus positive developments in Libya (the recent stoppage in its largest oil field seems temporary) has kept oil prices below 75 levels. Dollar index reversed from 95.25 (200WMA) and is trading lower now at 94.63. US 10-2Y spread is trading at a 11 year low of 24.6 bps. This narrowing of spread should keep dollar index capped at 95.25 for the time being. Today we have the US retail sales where robust data would have little impact while a disappointment could lead to sharp fall in shorter term yields and therefore the dollar.
USDCNH looks relatively stable today and is nearing its resistance zone of 6.72. USDINR 1m NDF is trading 2p left indicating lack of offshore buying pressure. Most EM currencies have appreciated since Friday evening. India’s trade deficit of $16.6bn on the back of higher oil imports affected INR appreciation sentiments adversely. But I would think this was expected plus is a lagging indicator. With oil prices appearing to be capped near 80 levels and the worst season for INR behind us along with an outlook of a softer dollar in the near term, I would think that USIDNR can still head towards 68.30. Medium term range 68.30-68.85. CMP 68.55, Range 68.60-68.40.
No comments:
Post a Comment