Friday 17 January 2020

Currency Market 17-Jan : Twist and Switch Combined :)

Globally, US dollar index recovered to 97.40 levels after the release of stronger core-retail sales. US core retails sales grew by 0.7% against previous reading of 0.0% (M-o-M). Improved retail sales number can also be attributed to Festive and New Year related spending. On other hand, USDJPY continued to trade above 110.0 levels amid a recovery in risk assets. GBP/USD pair, which is trading near 1.3070 levels, will take further cues from retail sales numbers, due to release later today.

On domestic front, RBI announced fourth tranche of Operation twist, wherein RBI will buy INR 10,000 bonds of 2024 and 2029 maturities and sell 2021 maturity bonds. At same time, RBI also announced switch operations of INR 25,0000 bonds. Government will buyback 2020 maturity bond and will sell INR 20,000 worth 2029 bonds and sell INR 5,000 worth 2024 bonds. These two operations combined should result in increase of duration of investors. It is noteworthy that today, RBI will also conduct a scheduled auction of INR 16,000 bonds. In this auction the share of 2029 maturity bond will be INR 7,000 cr.

On currency front, USDINR pair has been trading with biddish bias at 70.98 levels. USDINR pair has support at 70.75 levels and USDINR pair has first resistance at 71.05 levels and second resistance at 71.25 levels. The Range for the day seen as 70.75 to 71.15

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