Globally, German CPI inflation printed on 0.6% on m-o-m
basis against previous reading of -0.1%. EUR/USD pair is trading flat near 1.1240
levels. US equity markets recovered sharply as Dow Jones rebounded to 25.595
levels, nearly 2.3% higher than Friday’s close. US has suspended special
treatment for Hong Kong. On other hand, Chinese manufacturing and
non-manufacturing PMI released better than expected at 50.9 and 54.4. It is noteworthy
that other major economies are struggling with PMI data below 50.
On domestic front, Reserve Bank of India announced
another round of operation twist, where in RBI will simultaneously buy (Long
term) and sell (Short Term) government security worth INR 10,000 Cr. RBI will buy
govt bonds of long maturities (2027,2029,2031,2033) and sell govt bonds of short
maturities (2020 & 2021). Operation twist is intended to flatten the yield
curve. Today (30th June) RBI will revalue its FX reserve and balance
sheet as per year ending process. Thus, today’s USDINR price closing and RBI Fixing
rate hold a lot of significance. Interestingly, there has been a theory in
markets that RBI has been proactively intervening in FX markets to keep rupee
appreciation in check. Under the new Economic capital framework (ECF) higher
value to USDINR may allow RBI to announce higher dividends. USDINR pair has
immediate support near 75.35-40 levels and immediate resistance at 75.80-85
levels.
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