Strong signs of no more rate hikes by US; US-China meeting on Jan 7-8

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Market Highlights & Commentary:
  • INR opens stronger at 69.96 as against yesterday close of 70.19 and may trade the day mixed between 69.75-70.12 for the day. Yesterday INR faced strong resistance at 70.52 and it appears to be in range of 69.50 to 70.50. We also heard significant inflows on account of ZOMATO investment
  • This morning USD is mixed against most of its rival currencies ahead of high impact NFP data. While safe heaven JPY too is steady 64.63 levels. Asian equities shrugged off losses in DOW and most are in green. 
  • As USD weakens, gold is staging good comeback- almost gains of 6% in Dec and now around USD 1300.
  • US two year yields are now below fed fund rates and this shows that US fed may not be able to continue with any more hikes. We suggest not to hedge any libor risks
  • Yesterday U.S manufacturing data was released which fell to 2 year low (Refer graph below). The fall in U.S manufacturing activities added additional concerns over health of U.S economy

Technical Corner & strategy for the day:
  • USDINR seems to be finding support of 70.00 levels, if today price continues to close above 70 levels we may see 70.50-70.60 in coming days. However exporters are suggested to cover some part around 70.30/40 in the day while importers around 69.80/90.
  • GBPINR currently around 88.41 levels and may find support around 88.00, if price breaks below these crucial levels. We may see sharp fall in around 87.40/87.50
  • EURINR continues looks to be mixed at current levels of 79.71. If price holds above 79.30/79.40, we may see 81.20/81.40 in coming days.
Yesterday’s Market Recap:
  • INR yesterday traded stronger after opening weaker at 70.29. INR trader in the range of 70.04-70.50, but ended the day stronger at 70.19.
  • Other major currencies including EUR,GPR and JPY were mixed for the day.