Globally, UK
economic data continued to paint grim picture of economic activity. UK retail
sales declined by 0.6% in December (M-o-M). It is noteworthy that UK retail
inflation has also slowed to 1.3% in December. Consequently, GBP/USD pair fell
to 1.30 handle amid increasing expectation of a rate cut by Bank of England. BoE, which is scheduled to meet on 30 Jan, had
voted to keep rates unchanged with 7-2 in December. Currently, market is
pricing nearly 70% probability of 25 bps rate cut in Jan meeting. On the other
hand, Crude oil prices spiked to $65.50 per barrel amid internal tensions in
Libya, resulting in partial reduction in oil supply. Today, US markets will
remain closed due to Martin Luther King Jr. Day.On domestic front, 10 year bond yield spiked to
6.64% amid nearly INR 2500 Cr outflow from government securities.
On currency
front, USDINR pair is trading flat at 71.08 level against Friday levels of 71.06.
USDINR pair might trade with biddish bias amid delay in IPO related flows and
outflow from debt. USDINR pair has resistance at 71.25 levels and USDINR pair
has support at 70.95 levels. The range for day seen as 70.95 to 71.25 levels
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