It is a lighter week for fresh data prints but the FOMC minutes will be closely watched as every incoming piece of information would now be dissected to ascertain if the FED is going to hold or cut in the December FOMC. USDCNH has been firmly held above 7 levels for a week now which indicates that the next bout of yuan appreciation would need incremental positive information on the trade war front. Although phase 1 deal sentiments have improved substantially in the last one week, the trade war in its entirety will mostly likely extend to the November 2020 US presidential elections. With HK unrest increasing and China cutting rates on the back of weaker growth prints, the other factors for CNH (except trade war related sentiments) indicate to depreciation pressure.
Last two days saw long positions being cut in USDINR as risk sentiments improved. USDINR 1m NDF is 0.5p left which is mostly the same as Friday indicating no additional pressure. Emerging market currencies are largely flat since Friday in spite of mild dollar weakness against G7. The positivity about possible inflows into India is digested in price. A daily close below 71.56 (unlikely though) might indicate 71.35 this week otherwise we should again head towards 72.10 levels during the next week. For the day, CMP 71.65, Range 71.55-71.85.
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