Currency Market 28-Feb: Risk Off grips global markets!

Globally, Free fall in equity markets continued as Dow Jones tumbled nearly 1200 points and S&P tumbled more than 4% in a single day. In current sell off, S&P corrected more than 10% in just 6 days, which is fastest on record. US 10 year bond fell to 1.26% and USD/JPY fell to 109 handle.  Monetary easing seems to be ‘Only game in town’ as market participants expect global central banks to ease monetary policy to support markets economy. Future Fed fund rates suggest 98.5% probability of a rate cut in March meeting and nearly 80% probability of 75 bps cuts in the current year. On other hand, Euro, being funding currency, remained major beneficiary of current sell off as EUR/USD rallied to 1.10 handle.

On domestic front, sell off in Nifty, trading near 11,300, continued for sixth straight session tracking its global peers. Interestingly, domestic bonds fell despite lower US treasuries and lower crude. G-Sec 10 year bond yield have spiked after taking support near 6.32%, which is a rising trend line support zone. On data front, CSO will release India’s GDP growth number for December quarter today at 5:30 PM. Bloomberg survey has pegged expected growth at 4.7% against 4.5% in September quarter. On currency front, Indian rupee is trading with weakening bias amid sell off over Corona Virus worries. Technically, USDINR pair has taken support near 71.55 levels, which was higher end of previous range 71.20-71.55. USDINR pair has immediate support at 71.80 levels and first resistance at 72.05 levels and second resistance at 72.25 levels. Range for day seen as 71.80-72.05.