A month back the flattening yield curve showed risks of the FED backing out on further rate hikes. These risks have totally abated with the FED looking all set for 2 more hikes this year as the yield curve starts steepening again. EU data has not improved as much as markets expected and therefore we continue to see EURUSD trade in the 1.16-1.750 range. Trade tariff related worries continue to dominate overall sentiments. Today the most volatile DM central bank, BOE meets. It is expected to hike which is factored in expectations.
RBI rate hike of 25bps has been seen as proactive and coupled with its inflation forecast, market seems to have believed that yesterday’s rate hike was the last in the foreseeable future. Given this India 10Y yield has moved lower and the cool off in yields could lead to some amount of medium term focused debt inflows.
Trade worries seems to be dragging Chinese equities lower with Nifty down by 0.7% now. USDINR 1m NDF is trading 1p left only. EM currencies have mildly depreciated since morning today while in the last fortnight INR seems to have been less affected by trade related CNH selloff. FII outflows seem to have abated/reversed. Oil at 72.65 is positive for the rupee. Today does not seem to be the kind of day when INR can appreciate beyond 68.25 although my medium term bias is shifting to 68 and lower. CMP 68.37, Range 68.25-68.43.
No comments:
Post a Comment