Trump had postponed tariff increase on Chinese imports till
December 15th and on 19th August he has given Huawei
another 90 days to continue dealing with American entities. These two actions
indicate that for CY2019 he wants the focus to shift away from China. The trade
deal with China therefore should happen sometime in 2020 only.
Meanwhile as modern politicians operate Trump has to start a
new battle to occupy the mind space of his electorate. That could come in the
form of a trade rhetoric against the EU. This trade war possibility, plus
increasing growth differential between the US and EU, along with no deal Brexit
should make GBPUSD and EURUSD a good sell for the rest of the calendar year. A
weekly close in EURUSD below 1.1050 can open the door for sub 1.06 levels.
While a weekly close in GBPUSD below 1.1975 can open flood gates for a 5 biggie
move lower. Meanwhile the unresolved US-China trade dispute should keep USDCNH
grinding higher at the same time.
USDINR primarily follows global dollar strength/weakness
above all the other factors. Given the above view of dollar strength plus CNH
weakness the visible future for INR does not seem promising. The domestic
slowdown should at some point of time start showing in heightened fiscal
concerns . A weekly close above 71.80 on USDINR should bring 72.50 in range.
CMP 71.57, range 71.45-71.80.
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