Globally, GBP/USD pair fell to 1.3050 levels despite
the release strong PMI numbers. UK’s service PMI improved to 52.9 and
manufacturing PMI improved to 49.8 levels. It is noteworthy that the market is
currently expecting nearly 55% chance of rate cut, later this week, despite
stronger wage growth and PMI numbers. Technically, GBP/USD pair has support at
1.30 handle, a break below might lead to a sharp decline in pair. On the other
hand, Chinese yuan continued to trade with a weakening bias amid a rising death
toll due to Coronavirus. Chinese national holidays have been extended by 3 days
to contain the outbreak.
On domestic front, 10 year bond yield slipped to 6.55% amid sharp decline in US 10 year yields and crude prices. On currency front, USDINR pair is trading near 71.45-71.46 levels, tracking spike in USDCNH pair. Given the weakness in Chinese yuan is primarily on account of Coronavirus, which has not affected India, so weakness in rupee may be short lived. Technically, USDINR pair is trading outside the upper bollinger band in hourly chart, thus gives an opportunity to sell pair at CMP 71.45 with stop at 71.57, which is 61.8% retracement of previous move, and a target of 71.27 levels
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