Globally, US Fed
has cut interest rate by 50 bps to target range 1%-1.25%. FED statement – “The fundamentals of the U.S. economy remain strong. However, the
corona virus poses evolving risks to economic activity”. One can wonder that – In Health emergencies,
like corona virus, How can FED cut support economic activity? But then again, FED has also responsibility towards financial
markets too. US 10 year bond yield slipped below 1% to 0.98% for very first
time. FED future fund rates are suggesting 55% probability of another 25 bps
rate cut in April meeting. On other hand, EUR/USD pair surged to 1.1150,
rallying on familiar fundamental setup.
On domestic front, India reported few new cases
of Corona Virus, raising concerns of a possible pandemic. RBI has also issued a
statement – “coronavirus
triggering risk-off sentiments and flights to safe haven. Spillovers to
financial markets in India have largely been contained”. G-Sec
10 year bond yield opened the session 6.28%, which is below rising trend line support of
6.30%. Bonds are likely to trade with biddish bias amid possibility of interest
rate cut by RBI. On currency front, partially convertible rupee is trading with
weakening bias at 73.30 levels. The gains in USDINR pair further supported by
arbitrage opportunity b/w off-shore and on-shore markets. 1-month NDF is
trading 20 paisa higher, indicating buying pressure in pair. Technically,
USDINR pair has filled a daily gap b/w 1-Nov/2-Nov 2018 as trading high is 73.45
levels. USDINR pair has support near 72.77 levels and first resistance at 73.45
and second resistance at 73.90 levels
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