INR forecast: INR opens 70.02 as against yesterday close of 70.16 and may trade the day mix between 69.80-70.24 under two way price action. Yesterday INR weakened, despite all factors indicating strength. There were talks of defence payment. Not sure.
Yesterday U.S president Trump announced that they have reached a fresh trade aggreement with its NAFTA trade partner Mexico. The fresh agreement is seen as another move by Trump to promote U.S manufacturing and Labour market. While Canada 3rd NAFTA memeber) is yet to agree and settle its trade terms with U.S. Market is not sure whether Canada will agree to U.S terms of trade to form trilateral agreement between U.S-Mexico-Canada.
The new trade agreement wil add another advantage to President Trump as he now will be able to impose tariff which the NAFTA accord restricted. Just minutes after the announcement U S Dollar index slipped lower to 3 weeks low at 94.70 while other major and emerging currencies gained.
Frin Jackson Hole symposium, markets interpreted US fed statement as less hawkish and believed that US fed may toe Trump line of not increasing interests rates too often. This interpretation also resulted in weak USD.
Ideally above developments should bode well for INR and it should see relief from weakening streak. But price action is not supporting this interpretation and means weak undercurrent.