Globally, US and
China signed phase 1 trade deal, wherein China will increase imports from US
and US will reduce tariffs on Chinese goods. It is noteworthy that US has
removed China from list of currency manipulator. Amid this backdrop, Chinese
Yuan has rallied more than 2% to 6.88 levels and USDJPY trading near 110.0
levels. On other hand, a weaker UK CPI reading has fueled the expectation of interest
rate cut by BOE. UK CPI inflation eased further to 1.3% against previous reading
of 1.5. Though, GBP/USD pair remained bullish as it spiked to 1.3050 despite
weaker CPI.
On domestic
front, India’s trade deficit narrowed to $11.25 Bn in December as exports fell
by 1.8% to 27.36 bn and imports fell by 8.83% to $38.61 bn. In FY 2019-20, trade
deficit has witnessed sustained contraction against last year. For Apr-Dec
period, exports declined by 1.9% to $239.20 bn and Imports declined by 8.9% to
$357.39 bn reducing trade deficit to $118.10 Bn. Thus trade deficit has reduced nearly 17% from $141.21 bn to $118.19 bn. A closer look at
declining imports shows that it is primarily on account of slowing domestic
economic activity. Hence, though, contracting trade deficit is a good news but
celebration should rather be delayed!
On currency
front, USDINR pair has again rebounded from 70.75 levels and now trading near
70.85 levels. USDINR pair has support at 70.70 levels and USDINR pair has
resistance at 71.05 levels. The Range for the day seen as 70.70 to 71.05.
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