Globally, Risk
sentiments remain in charge despite the looming concerns over Coronavirus. Consequently,
US 10 year bond yields rebounded to 1.66%, USDJPY surged to 109.95 and crude
oil prices recovered to $ 56 per barrel. On trade front, China confirmed tariff
reduction on some goods from US to take effect from Feb-14, lending support to
risk sentiments. On other hand, US dollar index surged to two month high levels
of 98.30 amid stronger economic data. US ISM non-manufacturing PMI released at
55.5 levels, underling strong economic activity. Europe’s retail sales
contracted by 1.6% M-o-M, fueling selling pressure in EUR/USD. EUR/USD pair is
currently trading near 1.0995 levels and it has key support at 1.0980 levels.
On domestic
front, Reserve Bank of India is expected to keep interest rate unchanged and
should maintain an accommodative stance. MPC’s outlook towards spike in
inflation can be a major trigger for bond and currency markets. Retail
inflation in December has spiked to 7.35%, primarily on account of food
inflation. On currency front, USDINR pair is trading flat at 71.24-25 levels
despite rally in Asian peers. D-mart is likely to raise INR 4,000 cr through
QIP and Adani Electricity is also likely to trade $ 1 Bn through dollar bonds. The
immediate resistance for the pair is 71.32-35 levels and first support for
USDINR pair is at 71.15 and second support at 71.03 levels. Range for day 71.08-71.34
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