Thursday 5 March 2020

Currency Market 5-Mar: BoC cuts rate by 50 bps

Globally, Bank of Canada cut interest rates by 50 bps to 1.25% amid fears of Corona Virus. However, USD/CAD pair, which had spiked to 1.3431, is trading broadly unchanged at 1.3390 levels. US ISM non-manufacturing PMI released at 57.3 against previous reading of 54.9. Dow Jones rebounded more than 4% to 27,090 levels. The gains in Dow Jones were further supported as Joe Biden is leading democratic nomination with 566 delegates, while Bernie Sanders is second with 501 delegates. On other hand, South Korea has reported 438 new coronavirus cases – totaling to 5,766 cases and country also reported total 35 deaths due to virus.

On domestic front, Service PMI for Feb released at 57.5, near seven year high, suggesting green shots in the economy.  Bond markets continued to rally as 10 year G Sec yield fell to 6.23%, tracking its global peers. On currency front, USDINR pair witnessed a volatile session yesterday, amid large inflow in SBI cards IPO. SBI card IPO has been subscribed by 56.67 times in QIB category. Technically, USDINR pair has support at 72.90 levels and first resistance at 73.62 levels and second resistance at 73.90 levels

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