With USDCNH trading above 7.05 and CNY fixing getting weaker
every day the US-China trade war related risk cannot be ignored. Meanwhile
China has continued to make aggressive statements on retaliatory tariffs while
Trump administration has said that the President is not ready to make a deal as
yet. These developments along with hard Brexit related news would indicate that
there might be more risk negative news in store which should keep a cap on INR
gains.
Domestically the market is abuzz with chatter of a growth
stimulating package which can bring temporary relief to equity markets and INR
as well. India-Pakistan related geopolitical developments seem to be a tail
risk only for now.
Price action suggests that nationalized banks have been
buying USDINR aggressively. In the medium term 70.75 should continue to hold
while 71.80 can be tested on the higher side. For the day, CMP 71.10, Range
70.95-71.25.
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