Monday, August 19, 2019

INR update: Trade war and Brexit should continue to weigh on risk sentiments



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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