US-China trade talks could keep markets on the edge this week although commentary doesn’t suggest any quick resolution to the differences between the two countries. US-Korea talks and another US government shutdown do not seem to be very relevant for the markets at present. Italian growth concerns have pushed its 10 year yield from 2.55% to 3% in February itself, which is reflecting in EURO’s inability to make gains over the dollar in spite of a dovish FED. This week has a host of inflation prints from India, US, EU and China. But the global growth tide has turned and rate hikes are ruled out, making growth data more important than inflation, for which we have the EU GDP and US retail sales on Thursday.
USDINR 1m NDF is trading 6p right indicating moderate buying pressure on the pair. EM currencies have depreciated moderately since Friday as dollar registers strength and risk sentiment remains muted. Oil has given up its recent gains on the back of growth concerns helping INR. RBI’s rate cuts and expectations of another cut in April perhaps have resulted in some debt inflow over the last couple of days, although the same looks unsustainable. Overall range of 71-71.50 to hold. For the day CMP 71.24, Range 71.15-71.45.
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