Monday 6 January 2020

Currency Market 6-Jan: Risk off rally amid US Iran Tensions

Globally, escalating tensions between US and Iran took the centre stage as Trump threaten to attack Iranian cultural sites. While, Iran decided to step back from nuclear deal to underline its intents against Suleimani killing. Consequently, Crude oil spiked to 7 month high levels of 70.50, Gold rallied to $1580, USD/JPY tumbled to two month low 108 levels. These geopolitical tensions might remain elevated amid plausible advantage for Trump in upcoming elections.

On domestic front, India’s 10 year bond yields, which had rallied nearly 28 bps on Operation Twists, rebounded to 6.54% amid prevailing geopolitical tensions. On other hand, Today, RBI will conduct third operation twist to flatten the yield curve. RBI will buy and sell INR 10,000 worth bonds of three different maturities of 5,7 and 10 years and sell 1 year maturity bond. On currency front, USDINR opened the session on strong note at 72.01 against previous close of 71.795. Partially convertible rupee is likely to trade with a weakening bias amid geo-political tensions. USDINR pair has first resistance near 72.18-72.22 levels and second resistance at 72.40-72.45 levels. USDINR pair has support at 71.75-80 levels. The range for the day seen as 71.90-72.20

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