Turkish Lira and USDRUB depreciation spillover to other assets seems to be the reason for the overnight dollar strength and moderate risk selloff. Both are country specific scenarios with limited fundamental impact across the globe, nevertheless basket effect on EMs drove the all lower against the greenback. Today we have the US CPI where a higher number is factored in so a surprise could only be a lower than consensus print.
In spite of the overnight buying in USDINR, NDF 1 month continues to trade left by 1.5p like the entire week. Brent trading near 72.2 is positive for INR while CNH and KRW have also depreciated in the EM sell off overnight. PBOC has shown discomfort with Yuan at 6.85+ levels. August FII flows seem to have turned a corner as small amount are consistently flowing back in. Dollar index still has the major hurdle of 95.4 (200WMA) to cross which it has failed since May (we have not got a weekly close). Similarly on the Euro 1.15 has held since May, in spite of the ECB talking down the single currency in its June and July policy meetings, which would make me think that a close below 1.15 on a weekly basis is unlikely. With these factors into play I think 69.10-68.30 range should continue to hold with a possibility of a break lower only. CMP 68.86, Range 68.95-68.65.
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