Global growth concerns are weighing on equities making
today’s EU GDP and IIP data very critical for risk sentiments and the Euro. A
negative surprise in this can decisively break the 200 WMA in EURUSD at 1.1310
taking the pair towards 1.10 while a positive surprise can make the 200 WMA a
medium term bottom. Given Praet’s dovish comments yesterday the chances of a
negative surprise looks more likely.
The pace of fall in oil prices is increasing which shows
that the bottom can still be some distance away. USDINR 1m NDF is trading 4.5p
left while other EM currencies have not appreciated as much (except CNH). Fall
in EURUSD should on an intraday basis affect the Rupee (and vice versa).
Looking at the price action since morning it seems that USDINR might head
towards 72.20 again before it gets sold off. Last time when Brent was at 65
levels (March 2018) USDINR was at 65.5 levels, although it is not a one to one
comparison but most of the negativity in Rupee this year was on account of
higher trade deficit, and therefore if other factors support the downside for
USDINR pair could be significant. Medium term range now shifts to 72.40-71.50;
CMP 72.14, Range 72.20-71.90.
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