Today is a crucial day for the dollar index (CMP 97.37). As suggested dollar index was not able to surpass 98.9 levels last week / month. A weekly close for the dollar index below 97.35 would open the door for 97 figure and 96.01 (200 WMA). NFP today would be crucial as a weaker NFP would result in the overtly dollar long positions against EUR ($8.5b long according to IMM) and JPY ($4.5b long) to be unwound. This would reflect across EM currencies and notwithstanding the connotations of risk on-off sentiments.
RBI has clearly shown for records that its mandate is managing inflation at 4% and not core inflation or some other measure of price. This stance is worth applauding, at least currently as inflation is above 4% and likely headed towards 5%. Unlike in the recent past, RBI hopefully would show the same determination to keep inflation at 4% when inflation dips below median. If there is one macro factor which has been a problem for the country it has been inflation but in the same breath I must mention that for a growing country, inflation at 5% is perhaps much better than inflation at 3%.
The next level to watch for USDINR is that of the dollar index as mentioned above. A downward break of dollar index as mentioned earlier could take USDINR to 70.30 next week. For today we are seeing a correction in the short positioning built over the last 2 days. For the day CMP 71.35, Range 71.50-71.25.
No comments:
Post a Comment