Globally, Risk
off sentiments took center stage as Corona-virus infected cases increase
outside China. South Korea, Italy and Iran now have more than 760,150 and 43
cases respectively. Consequently, USDCNH spiked to 7.0550 levels, Gold prices
surged to $1643 and US 10 year yield tumbled to 1.48%. As discussed earlier
that financial markets were under-pricing virus risk, thus this risk off move
might extend in coming days. On other hand, US PMI data disappoint as manufacturing
PMI fell to 50.8 and service PMI fell to 4 year low of 49.4 levels. Consequently,
US dollar index corrected to 99.20 levels before finding bids owing risk-off swings.
On domestic front, Prime Minister Modi is hosting US President Trump, on his maiden visit to India. Although, a trade deal is not on the cards, but US and India can make significant bilateral announcements. Later today, RBI will auction 1 year term repo of INR 25,000 cr at 5.15%. It is noteworthy that previous auction of 3 year term repo had attracted 8 times the notified amount. Given, Banks have little restriction and fixed price auction, they are trying to out-bid each other on amount. On currency front, Indian rupee opened the session on a weak note, tracking its Asian peers, with USDINR opening at 71.90 levels. USDINR pair support at 71.70 levels and resistance at 72.05 levels. Range for day 71.75-72.05
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