Surprise negative consumer confidence data from the EU
accompanied by contrasting positive data from the US led EURUSD marginally
lower and kept USD well bid. Strong equity performance on the back of better
than expected earnings in the US also helped risk sentiment and consequently
USD against the other G10 currencies. Today Germany’s IFO survey would be
important for the Euro. A break of 1.1150 on the euro should bring in 1.10
levels fairly quickly now.
The RBI swap window saw a much higher than expected cut off
at 6.40% while markets yesterday was trading at 6.22%. The higher number of
bids perhaps indicates there is significant paying interest left in the market.
RBI recognizes the liquidity shortage in the market because of which it
announced the OMO of 25k crores yesterday to be conducted in May. Its second
objective of bringing the FX implied cost lower has been less than partially
achieved as 3 year Mifor trades at ~6.55% as compared to 6.82% before the first
auction was announced. This liquidity shortage plus higher 3 year forwards
should make RBI announce further swap auctions in the near future, which only
would calm the 3 year forward levels.
USDINR 1m NDF is trading 4p right while other EM currencies
have mildly depreciated on the back of USD strength overnight. Oil rally has
slowed down on the back of comments suggesting that Saudi Arabia would step up
production to make up for the reduced supply. Overall oil supply fears are
likely to linger on for some time with counter threats from Iran. Pipeline for
USDINR inflows continues to look strong according to news reports. Today NCLT
decision in a steel majors debt resolution would be critical to INR. Price
action in the last 40 minutes shows some aggressive offers at higher levels.
CMP 69.85, Range 69.95-69.60.
No comments:
Post a Comment