INR update: Gradual rhetoric suggests a dovish FED

Incremental views on the FED perhaps taking its foot of the gas pedal (WSJ article on the FED not running down its balance sheet) took dollar lower. The ECB on Thursday was not as dovish as data would have made us assume which ensured that EURUSD did not bINR update: Gradual rhetoric suggests a dovish FED

Incremental views on the FED perhaps taking its foot of the gas pedal (WSJ article on the FED not running down its balance sheet) took dollar lower. The ECB on Thursday was not as dovish as data would have made us assume which ensured that EURUSD did not break lower than 200WMA at 1.1325. I would expect dollar index to gradually move lower given the falling rate hike expectations plus a potential resolution of trade conflicts between US and China. This would ensure that USDJPY stays below 110 (not withstanding risk sentiments) and EURUSD stays higher than 1.1325.

Price action  clearly suggests that RBI is uncomfortable below 71. The best chance of breaking below 71 was last week, we have the budget this Friday which should ensure that participants would not want to run short USDINR at least till clarity emerges. Other EM currencies have appreciated on the back of dollar weakness but USDINR trades in a narrow band guided by the central bank (perhaps). Range till Friday should remain 70.90-71.45, while for the day, CMP 71.13, Range 71.00-71.25.

Regards

Saket Agarwalla move lower given the falling rate hike expectations plus a potential resolution of trade conflicts between US and China. This would ensure that USDJPY stays below 110 (not withstanding risk sentiments) and EURUSD stays higher than 1.1325.

Price action  clearly suggests that RBI is uncomfortable below 71. The best chance of breaking below 71 was last week, we have the budget this Friday which should ensure that participants would not want to run short USDINR at least till clarity emerges. Other EM currencies have appreciated on the back of dollar weakness but USDINR trades in a narrow band guided by the central bank (perhaps). Range till Friday should remain 70.90-71.45, while for the day, CMP 71.13, Range 71.00-71.25.