Currency Market 27-Dec: Yield tumbles on second round of Operation Twist

USDJPY pair retraced from its near 7 month high levels of 109.68 to 109.44 after release of Tokyo core CPI numbers. Tokyo core CPI released at 0.8% against previous close of 0.6%. It is noteworthy that BoJ’s governor Kuroda has reiterated that “BoJ is ready to ease if 2% inflation target comes under threat”. On commodity front, Crude oil prices continued its upward journey as Brent oil surged to a fresh 3 month high levels of 68.00. Crude oil prices will take further cues from inventory data, due to release later in the day.

On domestic front, India’s 10 year bond yields tumbled nearly 6 bps to 6.51% as RBI announced next round of operation twist. Just like in last OT, RBI will buy long term 6.45% GS 2029 of INR 10,000 Cr and sell various short term bonds. On currency front, RBI fixing quoting in discount at -1.25/-0.5 and Dec future is trading +1 paisa with respect to spot. This indicates relative selling pressure in OTC market in comparison to future market.  USDINR pair opened the session on a flat note at 71.31. USDINR pair has first resistance at 71.30-35 levels and second resistance at 71.48-52 levels. USDINR pair has first support at 71.09-71.12 levels and second support at 70.97-71.02 levels. Range for day seen as 71.07-71.35.