Tuesday, April 16, 2019

INR update: Positives priced into Rupee and Nifty, India & China export growth surprises



FED’s Evans made dovish comments stating that inflation should be allowed to remain above 2% for certain periods to counter the impact of stubbornly lower inflation. With dollar index stuck in a range, most of the other G10 pairs have also followed suit. German Zew survey would be watched today although EURUSD has been pretty resilient to any sort of information of late.

Oil is trading around 71 levels while EM currencies have mildly lost since yesterday evening. USDINR 1m NDF is trading 5p right while price action in the last 1 hour has been confusing. Fix is trading positive today. The inflow pipeline is priced in USDINR as the market now awaits actual selling as and when it happens. Nifty trades at all time high indicating the optimism that markets have priced in for the elections. Export in March 2019 were the best ever, this accompanied with China positive export surprise indicates that global demand is not as negative as earlier envisaged. Half an hour of trading above 69.60 today would confirm a breakout of my expected range for April of 69.50-68.50, this could then take the pair towards 69.90, on the other hand failure to break would take the pair sharply lower towards 69.25/30 levels again. CMP 69.55, Range 69.60-69.30.

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