BOE revised UK growth forecast lower for 2019 (from 1.7% to
1.2%) while incoming EU data continues to create worries. This accompanied with
swinging outlook on the US-China trade deal did not help risk assets yesterday.
Overall global growth slowdown in 2019 seems to be market’s base case with
US-China trade deal as the unknown variable. Today a weekly close for EURUSD
below 1.1330 (unlikely) can start a fresh down move taking the pair below 1.12,
but then prices remain in range more often.
RBI cut rates against 75% market expectations of no cut.
Fiscal and monetary policy are both pro growth while the only worries are the
bond supply and political uncertainty. USDINR 1m NDF is 5p right while EM
currencies have depreciated on the back of moderate risk off tone. Both 70.80
and 71.80 can be reasoned out currently and therefore I would expect USDINR to
stay in the range of 71 and 71.50 for some time. Price action suggests presence
of RBI on both sides in case of large intraday moves. CMP 71.32, Range
71.42-71.10.
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